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Banking giant Citigroup has rejected attempts by Terra Firma, Guy Hands's private equity firm, to restructure EMI, the music business it bought for £2.5 billion in 2007.
That has left EMI to be run by its own executives, although Hands-appointed non-executives like Lord Birt and former Northern Foods chief executive Pat O'Driscoll remain in place.
Citigroup turned down Hands's plan which would have seen Terra Firma inject a further £1 billion of capital into EMI in return for the bank writing off the equivalent amount on its £2.6 billion of loans to the business, according to Financial News.
The scale of the write-downs was too great for the bank, and Hands is said to be looking at new proposals which would be more acceptable.
At its peak Terra Firma had some 40 executives working full-time at EMI, but that number had shrunk to around just 10 in recent months.
Citigroup was left as Terra Firma's sole lender on the EMI deal in 2007 when the looming credit crunch made it impossible to syndicate the loan.
Since the takeover, EMI has suffered along with its rivals from the downturn in the music industry and the growth of online piracy.
It has also been hit by feuding with a string of stars unwilling to be managed by “suits”, with Joss Stone the latest to hit out at her own recording label.
