EMI is considering an audacious plan to address its crippling debt issues by borrowing £1bn by using its flagship publishing arm as collateral.

In a last ditch-bid to turn the company around after its second profit warning this year, chairman John Gildersleeve and chief exec Eric Nicoli are examining options to 're-engineer the balance sheet' The Sunday Times reported.

The designs centre on borrowing against EMI's publishing concern, which has not been affected by the digital revolution that has significantly impacted its recording division.

Standard and Poor's, the credit ratings agency,  currently evaluates EMI's debt rating at BB minus and has put it under review. The beleaguered corporate may resolve to borrow £1bn against the prestigious arm's publishing revenues, using the proceeds to repay more expensive debts and prospectively save £20m a year.

An EMI spokesperson told the Sunday Times: 'Of course we regularly review our financing options, but no decisions have yet been made at this time.' The music group's net debts are set to rise to £1.25bn due to restructuring and redundancy costs in addition to a £93m bill for buying out minority interests in Japan.