Struggling music group may drag itself out of debt quicksand by borrowing against its crown jewel publishing business
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 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.