Business

Hands off, Guy

As private equity honcho Guy Hands scrambles to win enough investor support to pump more money into struggling music label EMI and avoid a default, New York City’s main pension fund is taking a pass, a source familiar with the matter said.

Miffed at how Hands and his firm Terra Firma have bungled the management of the label since paying $4.7 billion in 2007, the city’s pension fund, citing a lack of confidence in both Hands and EMI management, is voting not to direct more of its money to the label, the source said.

Pension officials are also fuming at Terra Firma’s insistence on investors continuing to pay a management fee to the firm despite Terra Firma having written down their investment to zero. That effectively means Terra Firma is asking for more money twice, sources said.

“You’d rather not have a management fee,” a second source said. “It is the principle of it.”

Officials at the city’s $100 billion pension fund declined to comment on the matter.

While the pension’s investment in the $6.9 billion Terra Firma fund used to buy EMI represents about 2 percent to 3 percent, Hands needs as much support as he can get.

The fund includes more than 100 investors — mainly state pension funds and endowments — and Hands must secure approvals from investors accounting for 75 percent of the fund to inject another $156 million into EMI and keep lender Citigroup from seizing control of the label, whose artists include The Beatles and Katy Perry.

Terra Firma has spent 31 percent, or $2.14 billion, of its $6.9 billion fund on EMI, and because it cannot invest beyond a certain percentage of its funds in any one deal, the firm needs approval to put more fund money in the business.

Citi has been bearing down on Terra Firma for months, looking to take control of EMI and most likely sell the London-based label in pieces. The two sides have been locked in a legal tussle, as Hands has accused Citi of duping him into paying far more than he would otherwise because he claimed Citi left him with the impression at least one other bidder was vying for the label even though Terra Firma was in fact the only suitor.

Edgar Bronfman Jr.’s Warner Music Group has been viewed as a likely candidate to buy much of EMI, but has been waiting in the wings until EMI stumbles and can be picked up on the cheap.

Votes are expected to start rolling in today and tomorrow, at which time Terra Firma must inform Citi whether it remains in compliance with the terms of the loan used to buy the label. A payment on the debt is due next month.

While there are indications that Hands could get the approvals he needs, some investors may need some convincing.

One investor who initially was inclined to support Hands told The Post yesterday that he’s now on the fence.

In addition to balking at having to continue paying Terra Firma a fee despite the bailout, the investor said there was also worry about whether the label has turned into a money pit.

“The question in some people’s minds is, ‘Is it good money after bad?’ ” the investor said.

Not helping matters is that rock legend Queen is expected to jump ship for Universal Music Group after 40 years, raising questions about the label’s ability to boost cash flow. josh.kosman@nypost.com