All posts tagged Citigroup

Wednesday Bits & Pieces: Guy Hands to Appeal EMI Ruling, Doug Morris Seeks Early UMG Exit & more…

Hands Appeals EMI Ruling

Originally it was believed that Terra Firma would not appeal the ruling in Guy Hands‘ trial over EMI against lender Citigroup handed down last year, however it was announced by the private equity firm yesterday that a notice of appeal was indeed filed. Details as to what specific rulings are being appealed were not released… Reports of an imminent sale of EMI, as soon as four to six weeks from now, are being denied by both Citigroup and Terra Firma according to information shared with Music Week, representatives from both saying that formal action won’t be taken until March… Elseswhere, Doug Morris is reportedly in talks with Universal Music Group owner Vivendi SA to arrange an early exit from his contract as chairman. Presumably the expedited departure is being sought in order to join Sony Music Entertainment. Rumors persist that Morris is the likely candidate to replace outgoing Sony Music CEO Rolf Schmidt-Holtz, whose contract is up in March… And Mike Elizondo joins Warner Bros. Records as a staff producer and Senior VP of A&R, a position previously held by Rob Cavallo.

Monday Scuttlebutt: EMI Countdown, Hands in the Cookie Jar & KKR’s BMG Wants It All

Handing over to Citigroup?

Less than a month ago, reports were indicating that a deal might see EMI change hands from Terra Firma to lender Citigroup before Christmas, a result of negotiations following Guy Hands courtroom defeat – seen by most as a last ditch effort to maintain control of the music company. Still yet to happen, reports over the weekend are indicating that it may only be a matter of weeks before Hands relinquishes control of EMI to Citi, who is rumored to already be lining up potential suitors for both the recorded music and publishing divisions. In what some see as further corroboration is the disclosure of a £12m dividend taken by Hands last year, which is an amount five times the company’s after-tax profits, though also less than a quarter of the personal funds he told the New York court he had put into EMI… Who is the most likely to bid on EMI if Citi takes control? The Guardian reports that just last Friday it was being heavily rumored that the recorded music arm would be quickly sold by Citi to Warner Music Group, while the publishing would be acquired by KKR‘s BMG Rights Management. Though further reports this morning reveal that BMG RM could be interested in both arms of EMI, but not the production or distribution sides.  If so, this could create a scenario that harkens back to talks held by EMI with rivals Sony and Universal last year, exploring the option of raising funds by licensing its catalogue for distribution. Depending on how it goes down, everyone could be in on this, one way or another…

Holiday Stew: The New Universal Music Group Taking Shape & is EMI Coming Undone?

Hands tied over EMI?

2010 is speeding to a halt in the coming weeks and there’s no shortage of hubbub within the industry, as a number of big changes are looming on the heel of a year already fraught with tumult. Just last week came confirmation of Barry Weiss‘s rumored departure from Sony Music to take a top level position within Lucian Grainge‘s new blueprint for Universal Music Group, with all signs indicating that he will act as Grainge’s primary lieutenant on the East Coast while the new UMG chief resides in Los Angeles… The news of Weiss’s move was followed, almost immediately, by buzz that Doug Morris is now the likely shoe-in for the top spot at Sony, taking the place of outgoing Rolf Schmidt-Holtz. Recent times have seen bigger problems at Sony than Coca-Cola coming through the faucets, leaving many to wonder if the veteran executive could help turn around the struggling operation…  And reports over the weekend are indicating that EMI Music might be headed for a takeover by Citigroup before the end of the year – a result of Guy Hands courtroom defeat and being stonewalled by investors in his recent fundraising efforts… It all leads to an outlook filled with questions and ripe with speculation. Stay tuned…

Situation at EMI: Was Exec Shuffling Ahead of Verdict Early Signal of Break Up?

Exec cost cutting ahead of sale?

In the wake of a courtroom defeat for Guy Hands and Terra Firma in the legal action brought against Citigroup, all talk has turned to the fate of EMI. With the likelihood of more investors stumping up funds to keep the company in control of its current owners slim, and a dept-for-equity swap with Citi or even licensing content to another major music group, an avenue that was explored previously, exist in the realm of possibility, almost all signs indicate that one way or another the music company will fall into new hands (no pun intended).  The list of suitors currently being thrown around includes the usual suspects who have had an eye on EMI’s recorded and publishing sectors, such as BMG Rights Management, Warner Music Group and  Sony/ATV. But a look at executive movement within EMI over the past months seems to indicate that a sale or break up of the company may have been a foregone conclusion. Back in June Roger Faxon was named Group Chief Executive, moving him over from his longtime leadership at EMI Music Publishing, and soon after executive house cleaning began with Faxon ultimately tapping Dan McCarroll to take the reigns as prexy of Capitol & Virgin Label Group just last month – McCarroll was also plucked from EMI’s pubco where he was previously EVP of creative. And last week saw the news of Rob Stevenson‘s exit from the label, after being installed as President of Virgin in 2008 under now departed Nick Gatfield. Names of possible replacements being rumored include more execs already planted within the EMI structure. So are all the internal moves simply a reversal in the earlier unsuccessful practice under Hands to bring in outsiders? Or as some are indicating, is it to minimize costs ahead of a sale and reduce the typically high expense of hiring outside for creative executive positions? Stay tuned…

Terra Firma vs. Citigroup: Jury Deliberates

Label's Fate in Jurors Hands?

[UPDATE: After just 4 1/2 hours of deliberation, the jury has ruled against Terra Firma in the case it brought against Citigroup, which could possibly force Hands to relinquish control of EMI to the bank...] Yesterday the jury in the trial between Terra Firma and Citigroup over the 2007 acquisition of EMI heard closing arguments from both sides. David Boies, attorney for Terra Firma, gave an impassioned speech to the eight remaining jurors, which lasted over two hours, essentially explaining that if it were true that Citi’s David Wormsley had not mislead Guy Hands into thinking there was a rival bid for the storied music company, then he of course wouldn’t have gone through with the auction purchase, saying “If they hadn’t believed Cerberus was bidding, if they didn’t believe there was an active auction, why would they have gone ahead and submitted a bid?”. Citi attorney Ted Wells gave a very matter-of-fact argument that his client never mislead Hands, and there was no concrete evidence provided during the trial to prove otherwise. The basis of his closing argument being that Hands was brash in thinking that he could turn “tin into gold” and that he only brought the case about because he was upset over his poor investment, saying of Hands, his “magic sauce didn’t work this time.”

Terra Firma vs. Citigroup: Cat-Fighting & Juror in Question

More Bad News for Hands

This week is expected to be the last in the trial that has Guy Hands pitted again U.S. bank Citigroup, in the well publicized disputed over Terra Firma‘s 2007 acquisition of EMI. Hands received more bad news as proceedings resumed this week, with the Judge, who called the case a “cat-fight between two rich companies,” ruling that the jury will not be allowed to consider “punitive damages,” and it also looks unlikely that the Judge will allow the plaintiff to pursue “consequential damages” – the additional debt obligation funds that Hands and his investors dumped into EMI this past June. Citi lawyers have also sought to remove a juror from the panel, because her name appears in the credits for Michael Moore‘s film Capitalism: A Love Story under “special thanks” – there was not an immediate ruling on the request for removal. The jury is expected to start deliberations on Wednesday…

[*UPDATE: The juror in question Donna Gianell, was in fact removed from the trial by the Judge Rakoff on Tuesday evening, though the reason given was that she lied to the court about having a conversation about the case with other jurors in an elevator... Ted Wells, lead Citi attorney said of Moore's film “This movie is so insidious,” including “You got to have a verdict at the end of the day that people will respect.”]

[**UPDATE: New York Times DealBook talks to the dismissed juror]

Terra Firma vs. Citigroup: No Lost Profits for Hands

Yesterday Judge Jed Rakoff, who is presiding over the Terra Firma case against Citigroup, ruled that he would not allow testimony from a Terra Firma witness to demonstrate a theory of “lost profits,” essentially cutting possible damages the investment firm is seeking by 1/4 of the original $8 billion sought – it was one of three theories the plaintiff’s team had based their claims for damages on. Guy Hands lawyer David Boies also withdrew another theory that Hand’s company, if victorious in the case, would receive compensation for being “locked in” to the EMI investment while its value fell, which could have been calculated in the amount of $2 billion. The prevailing angle now is that of “fair market” which potentially could see damages awarded in the same amount, though it hinges on how market value is calculated – of course this is all presuming a victory for Hands.  Two of Terra Firma’s fund directors in the EMI investment also testified yesterday, recalling two separate occasions that would support the alleged phone conversations regarding the Cerberus bid.

Terra Firma vs. Citigroup: Big Love & Playing Games

The Worm Testifies

Yesterday saw the end of Guy Hands testimony in New York City. Facing repeated questions about the lack of evidence proving his alleged phone conversations with Citigroup‘s David Wormsley took place, Hands stated that he “never kept notes. Even at university,” due to illegible handwriting from dyslexic and dyspraxic conditions… Wormsley also took the stand for the first time yesterday, though for only a short time, less than 30 minutes, primarily trying to establish his trustworthy standing with Hands and his firm, telling Terra Firma lead attorney David Boies “I would always be as truthful and honest as I could be.” Boies also provided a number of email exchanges that show Wormsley’s early focus on wooing Hands and Terra Firma, presumably in an effort to start the process of leading jurors on a path that ends with The Worm‘s lack of integrity as a trusted advisor to Hands being exposed. One such exchange had Wormsley writing in an email to another (now former) Citi executive, For reasons I won’t go into, we have to show big love to Terra Firma. To that end, it would be very helpful if you had an hour in London next week to sit down and meet with the Terra Firma team and hear their story... Today Wormsley’s testimony continued, with more phone calls and emails being brought to light – one of which was a call to Wormsley from a member of the EMI deal team relaying a conversation with Hands in which he disclosed Wormsley had tipped him that a bidding price for the music company at 2.4 pounds per share would be approved. Wormsley said he was “furious” about the call, and wanted Hands to send a “written confirmation” to the EMI team declaring that conversation had not happened – this came after testifying earlier that Hands had a reputation for making “low-ball offers.”  Also during his time on the stand today, he stated that Citigroup did not act as an advisor to Terra Firma on the deal, and that a majority of his correspondence with Hands dealt with financing aspects.  In another email that was revealed, sent to EMI’s Eric Nicoli hours before the bidding deadline,  Wormsley indicated that he had told Hands not to “play games on price.”

Terra Firma vs. Citigroup: Paperless Trail

In his cross examination of Guy Hands today, Citi attorney Ted Wells inquired about Hand’s proof of his conversations with David Wormsely, which are primary to Hand’s claim that The Worm misguided him through his auction acquisition of EMI, asking, “You cannot identify one single piece of paper in the corporate records that reflects that you had a conversation with David Wormsley about his representation that Cerberus was going to bid 262 on Monday, May 21?”

Hands Cross Examined

With Hand’s replying, “I’m not personally aware of any, no…”

On Tuesday Hands testified that on a few separate occasions he had phone conversations with Wormsley during which he told him that Cerberus Capital Management was offering to pay 2.62 pounds per share for EMI.  Asserting that had he known it was a “busted auction,” Terra Firma would have had more time to perform due diligence, telling jurors, “In an auction process the company determines the information you can get. In a non-auction acquisition you get much more leverage.”

Terra Firma vs. Citigroup: Opening Statements

Trial over EMI acquisition begins

In day one of the showdown between Terra Firma and Citigroup in New York City yesterday, lawyers from both sides did little to mince their words…

Said David Boies (representing Terra Firma), of Citigroup’s David Wormsely, he was “playing two sides of the street at the same time.”

“Mr. Hands thought he had the golden touch,” said Ted Wells (representing Citigroup) of Guy Hands – “He did for quite awhile until he bought EMI.”

The only witness to take the stand was Tim Pryce, former Terra Firma general counsel and current chief executive, who was asked if the EMI Music acquisition codename Project Dice was “meant to convey a dicey transaction?”

Friday Round Up: Sony Music Top Spot, Face Off Over EMI, CMJ & More…

Bandier Enters the Sony Music Fray (L) Hands Set for Face Off (R)

A story in the New York Post this morning threw Sony/ATV CEO Marty Bandier into the mix of names swirling in the bid for the top spot at Sony Music, indicating his neutral position in the ongoing “civil war” within the company as a plus. Citing unnamed executives, the piece also speculated that current RCA chief Barry Weiss might land at Universal Music Group if he isn’t named as successor to current Sony Music CEO Rolf Schmidt-Holtz - a scenario being floated by more than a few folks in-the-know… Meanwhile the buzz around the courtroom showdown between Terra Firma and Citigroup over EMI continues as the WSJ reports today that talks between the two sides failed this week, though there is still time for a settlement to be reached over the weekend. Informal talks could continue even after the trial’s start on Monday if an 11th-hour pact isn’t reached – Guy Hands is expected to take the stand first… No stranger to firing rumors, gossip that Island Def Jam ruler L.A. Reid is as good as out continued this week. While a move to television in the form of an American Idol or X-Factor judge position was previously floated, insiders share that a quiet departure with a label-imprint in hand seems a more likely scenario… In other updates, Steve Aoki has entered into a world-wide co-publishing deal with Warner/Chappell Music, the A-Team’s own B.A. Baracus (aka Marc Wilson) signed the producer/writer/DJ who has upcoming projects in the works with Rivers CuomoChiddy Bang, Travis Barker, Will.I.Am and Sky Ferreira… The CMJ Music Marathon 2010 kicks off next week in New York City, including a keynote address from Jason Flom – other panelists slated to speak include David Boxenbaum (A&M Octone), John Boyle (Hello Music), Lindsey Cook (RCA), Eric German (MS&K), Jon Pikus (Lava/Kirkwood Ranch) and many others… The label action continues to wind up around Seattle’s The Head and The Heart after whipping A&R folks into a frenzy with their L.A. shows last week. Zeitgeist‘s Jordan Kurland has picked up the band for management… IAMMEDIC continues to generate label interest, taking multiple meetings after their EP-release show last week. A collaboration with Far East Movement is set to take place on the heels of their remix of the band’s “Like A G6″ – the top song on BigChampagne‘s Ultimate Chart this week… Catch Las Vegas act And She Whispered at the House of Blues Hollywood this Saturday (Oct. 16), as they open for All That Remains on their current North America tour. The band has received airplay on LV’s Extreme Radio and has been drawing big crowds in their hometown… IN THE MIX: Amanda Ghost, Fearless Records, Chappo, OFWGKTA and Box.net

5 Questions Surrounding EMI

1. All eyes are on Guy Hands’ upcoming courtroom face off with Citigroup; will the two sides reach an 11th-hour agreement, possibly with the US Bank getting a stake in EMI in exchange for writing down debts?

2. Does executive shuffling by Roger Faxon inside EMI’s recording and publishing divisions signal a return to longtime speculation of a whole or partial break up of the company’s more valuable assets?

3. Where will recently departed Nick Gatfield land? Word on the street is that after talks with Sony Music dried up, the likely play at Universal Music Group is also out of the picture because of a strained relationship with new UMG boss Lucian Grainge.

4. Will more artists being leaving EMI? Rumors of more big name artists with little time remaining on deals eyeing the door are circling.

5. What will Rob Stevenson‘s role be in the newly dubbed Capitol & Virgin Label Group? After exiting his senior A&R post at Island Def Jam, Stevenson was brought in by the now unseated Gatfield in 2008 to take the Presidency at Virgin Records.

Tuesday Bits & Pieces: Terra Firma vs. Citi, eMusic + UMG & Google’s Music Exec Search

Terra Firma & Citi Face Off in NYC Next Week

The long awaited courtroom showdown between private-equity firm Terra Firma and Citigroup is set to begin next week in New York City over Project Dice, codename for the former’s 2007 acquisition of EMI that was heavily financed by the latter. The legal battle is largely being portrayed as a face-off between Guy Hands and Citi’s David Wormsley, with the highly publicized row between the two companies and individuals leaving many to believe that a last minute settlement is unlikely.  If a pact was reached over the weekend, some share that possible scenarios might include a conversion of loans by Citi into equity, giving the bank a minority stake in EMI… Elsewhere, Eminem‘s publisher is seeking enforcement of a settlement amount of over $2-million from a previous lawsuit involving Universal Music Group label Aftermath and Apple, over digital sales of the artist’s music on iTunes… Digital music service eMusic has announced its new partnership with UMG, adding an additional 250,000 songs to its catalogue – in a message this morning, presumable directed at those who have patronized the service since the early days when it mainly consisted of music from independent artists, the company tweeted, Our unique approach to music won’t change. We’ll still profile records we find interesting/ important, whether they’ve sold 4 or 4M copies… And the New York Post spotted Google CEO Eric Schmidt dining with former Sony Music executive Lisa Ellis over the weekend, speculating that the two were likely discussing possible candidates for the top spot at the company’s yet-to-be-unveiled music service…

In Case You Missed It: Reading Recap

Twitter Announces Deals with Google & Microsoft

Three Letter Circus > It was reported on Sunday that Citigroup was “lining up” buyers (including WMG) for EMI in an attempt to pressure owner Terra Firma into selling the music company (Guardian)… However the next day a statement to the contrary was released by the bank claiming that they were not seeking buyers, implying they couldn’t do so being a debt holder not an equity owner (Reuters)…

Tweet Deal > Twitter‘s seeming indifference to being labeled “profitable” ends with the micro-blogging service’s announcement of two content-search deals with Google and Microsoft (specifically Bing). The deals, worth a combined $25 million, will allow tweets to appear in both service’s search engine results (BW)…

It’s All Good > UK regulators approved the proposed merger of Ticketmaster and Live Nation, an about-face for the Competition Commission who previously expressed serious concerns over the deal (NYTimes)…

Freedom of Choice > Hulu makes further inroads in the music video arena by adding content from Warner Music Group, who is also the only major music group yet to make a deal with the label-backed video service Vevo. A similar arrangement between Hulu and EMI was announced last month (MediaMemo)…

In Case You Missed It: Reading Recap

Hulu launching in UK with new 19 Entertainment series

Continuing with their recent string of announcements, MySpace Music revealed a new deal with digital-media distro service TuneCore to allow independent (unsigned) artists to have their music included in the MySpace Music on-demand streaming service for a flat fee (Epicenter)… EMI is taking legal action against video site Vimeo, claiming that while the site may feature original video content created by users, many songs under their control are used in such videos throughout the site without a license (ars)… Can a scientific formula detect radio payola? A researcher at University at Buffalo says yes (Science Daily)… More from the Terra Firma-EMI saga, as it appears that Citigroup made a bid for the music company just prior to the investment firm’s recent legal action against the bank (FW)… And Hulu prepares to cross the Atlantic.  The popular online TV and movie streaming site prepares to launch in the UK early next year, but with just one show, a new 19 Entertainment reality series, If I Can Dream (MediaMemo)…

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