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Regulator steps in to £120m EMI pension dispute

Terra Firma’s turnaround of the music company has run into further difficulties in the same month US bank Citi reportedly failed to sell on £2.4bn of EMI loans.

EMI’s pension trustees have called on the regulator to intervene in a dispute with Terra Firma, which bought the music company last year for €6.2 billion ($9.64 billion).

Guy Hands: EMI
pension dispute

The regulator will need to adjudicate on a difference of more than £120 million (€151.9 million; $236.1 million) between conflicting calculations of the fund’s pension deficit.

Terra Firma’s spokesman said it believes the deficit is less than £50 million and it expects to clear this within five years. “The trustees believe it is £170 million, although it’s unclear how they reached this figure, and we’ve been unable to reach agreement so it’s gone off to the regulator,” he said.

The UK Pensions Regulator confirmed it had received a request to intervene.

A source close to Terra Firma said it may consider looking at partnering with pension insurance companies such as Paternoster or the Pension Corporation at some point to sell or offset risks related to the scheme, although it has not begun talks with any bidder.

Citi, the US bank, was unable to sell £2.4 billion of EMI debt in April after buyers were unable to receive assurances about the quality of the credit, according to Financial Times, the UK newspaper. Citi declined to comment.

Citi sold approximately $12.5 billion (€8 billion) in loans to a private equity consortium this month at approximately 90 percent to face value.