EMI 'planning cost-cutting measures to attract investors'

Music group EMI is preparing further cost-cutting plans to persuade investors to pump £120m (€137m) into the business, it was reported today.

The group – which is owned by private equity company Terra Firma and counts Robbie Williams and Coldplay among its artists – posted a £1.75bn (€2bn) loss for the year to March 2009 in accounts last week.

Terra Firma took on huge debts in 2007 to buy the firm, but it is almost certain to breach lending terms without further investment – handing control to lender Citigroup.

EMI chief executive Elio Leoni-Sceti is drawing up plans to strip millions of pounds from the company’s costs and rapidly grow the group’s digital operations, according to the Sunday Telegraph.

The music group cut more than 2,000 jobs in 2008 but a spokesman stressed: “There are no current plans for redundancies”.

Any jobs which go are likely to be through measures such as outsourcing, natural staff turnover and recruitment freezes, he added.

“The plan has not been written yet but when it is written it is likely to consist of a number of measures for revenue growth as well as continuing efficiencies,” the spokesman said.

According to the report, the ambitious plans involve growing digital music sales to 75% of total music sales within five years.

Terra Firma paid £4.2bn (€4.8bn) for EMI in early 2007 before the credit crunch hit home. This has left the business laden with total liabilities of £3.8bn (€4.3bn) as of the end of March last year.

The huge loss came after more than £1.1bn (€1.26bn) in one-off write-downs and restructuring charges, although EMI grew underlying profits during the year.

Terra Firma is currently engaged in legal action against Citigroup, claiming the group “misrepresented fundamental facts” over the sale of EMI.

It claims Citigroup falsely said there were other bidders for the record company, causing it to raise its bid. Citigroup denies the allegations.