Bill for keeping EMI afloat could be £440m

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Terra Firma boss Guy Hands must ask investors to stump up at least £120 million by June to ensure it remains a going concern.

EMI's parent company Maltby Capital, which made a pre-tax loss of £1.75 billion for the year to 31 March 2009, admitted that it will fail banking covenants on £3.19 billion of loans if investors do not agree to inject the cash, in which case lender Citigroup could seize control of EMI.

Terra Firma, which is suing Citi for damages over its disastrous £4.2 billion purchase of EMI in 2007, may have to invest another significant sum in 2011 as it is almost certain not to meet banking covenants which get tougher each year under the deal. Sources conceded that it may require a further injection of around £120 million.

The private-equity firm must also pay up to £200 million into the EMI Group Pension Scheme over a longer timescale because the funding depends partly on the financial strength of the company.

The Pensions Regulator is mediating in the dispute between EMI and the pension trustees.