Emi - Facing The Music

British music icon EMI has been battling against massive debts. If it didn't raise cash, and raise it quickly, its bankers could take the keys to Abbey Road studios and the rest of EMI's music empire.

But in an eleventh hour deal, EMI's owner, private equity firm Terra Firma, has managed to raise enough money to keep the bank happy for now. But for how long?

It still has to find a way of paying back over £3 billion it borrowed from Citigroup, and make money for its backers, who have seen their investment plummet in value.

Damian Reece, Head of Business at the Telegraph, returns to follow the fortunes of this troubled private equity deal.

Despite stars like Robbie Williams. Lily Allen, and Lady Antebellum climbing the charts, earlier this year EMI plunged £1.75 billion into the red. New strategies, cost cutting and redundancies have created profits for recorded music but not enough to solve the debt problem.

And now the private equity deal, which closed just as the credit crunch hit, is the subject of litigation. Guy Hands and Terra Firma investment funds are taking the bank that lent them money to buy EMI, to court. Terra Firma alleges they were misled about crucial details during negotiations to buy EMI. The bank Citigroup strongly denies all the allegations.

So what does the future hold? Could this be EMI's swansong or will the company win against the odds?

Producer: Liz Carney
A Unique Production for BBC Radio 4.

Music icon EMI has been battling huge debts. The Telegraph's Damian Reece investigates.