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EMI deal turns sour

Guy Hands and his Terra Firma operation are looking to take the red pen to EMI as the £4.2 billion acquisition hits yet more turbulence. The company recently filed accounts for 2009 showed a £1.8 billion loss and it is an open secret that the company is asking investors for a further £100 million plus to save the day. So what is exactly going on?

There is no doubt that companies such as EMI have suffered from the growing trend which has seen more people download music via the internet than ever before, leaving DVD and CD sales struggling. Many also believe that the fairly tight financial arrangement which went side-by-side with the acquisition has placed more pressure on the company in the short term than many had anticipated. It now looks as though the red pen will be taken to the company with a potential 3,500 job cuts and the contracts of loss-making artists potentially ripped up.

In the midst of this financial uncertainty for the group Guy Hand's is taking court action against Citigroup alleging that he was misled into thinking there were other bidders for EMI and may have overpaid. Whether this court action is successful and comes in time to save the group remains to be seen but the future of EMI is this evening shrouded in uncertainty.

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