Dead men are still walking at music giant EMI.
Almost four months after Terra Firma boss Guy Hands announced plans to lay off as many as 2,000 staffers worldwide at the troubled major label, he has yet to pull the trigger on the bulk of the cuts.
Three high-level industry sources familiar with the situation claim EMI needs more money to cover the restructuring costs, which are running higher than anticipated.
Once source said Terra Firma is looking to possibly raise another $60 million for EMI to help pay for the cuts. Multiple sources said raising the money was not going to be a problem for the firm.
A source close to Terra Firma vehemently denied the allegations, noting the firm just raised an additional $500 million in new EMI equity in January. The insider maintained there are no money problems associated with the music investment.
Terra Firma insiders are attributing the holdup to European labor laws, which require a lengthy review process before pink slips can be handed out.
The cuts are now expected by June, a source said.
Terra Firma has yet to even notify most staffers of who will be staying and who will be going, something that can be done before the cuts are formally cleared.
Critics said the holdup is making it difficult to effectively execute many day-to-day functions, with frustrated employees uncertain of their future with the company. It is also hurting EMI’s ability to make deals. Company insiders are blaming internal disarray on a reluctance to sign onto deals like the MySpace Music joint venture.
The slow pace of the restructuring is also making it difficult for Citigroup to unload much of the $4.9 billion in EMI debt it is carrying, a Wall Street source said.
The source said Citi had to leave EMI out of a $12 billion pool of leveraged debt the company sold off to a consortium of private equity firms out of concerns about its value.
Contrary to other reports this source indicated EMI was never seriously consid ered for inclusion in the pool, and instead was on a list of loans that are cur rently viewed as unsellable.
A source close to Terra Firma said Citi never ap proached the firm about selling the loan.
The Wall Street Journal reported that EMI’s loan would not fetch the price of 88 to 89 cents on the dollar that Citi was hop ing to receive from the sale.
Meanwhile, cash consid erations are said to be im pairing EMI’s ability to ac quire publishing assets.
Boosey & Hawkes, a classical music publisher coveted by EMI and Terra Firma, was sold last week to a Dutch pension fund for $248.5 million. That deal got away when the asking price proved too steep, sources said.
Multiple sources indicate Terra Firma is one of two front-runners for the Chrys alis catalog, but is pursuing it as a separate investment from EMI to satisfy fund re quirements on the maxi mum exposure it can have in EMI.
However, that deal is be lieved to have hit turbu lence.
Terra Firma was believed to be close to an agreement weeks ago.
Sources are now indicat ing that Chrysalis is threat ening to pull itself off the block and restart the auction process later this year.
Hands has plenty at stake in his bet on the music business: 20 percent of his funds are tied up in EMI, sources said.