From: To: "Jeffrey Epstein" <[email protected]> Subject: EMI worth £2bn less than we paid, Hands says Date: Mon, 15 Feb 2010 11:15:13 +0000 Importance: Normal EMI worth £2bn less than we paid, Hands says By Andrew Edgeclif fe-Johnson Published: February 14 2010 22:46 I Last updated: February 14 2010 22:46 Guy Hands, the boss of private equity group Terra Firma, has admitted EMI is worth £2bn (83.1bn) less than he paid for it in 2007, in a calculation that could provide a valuation benchmark for any future sale of all or part of the indebted music company behind Coldplay and Lily Allen. Mr Hands wrote last November to Citigroup <http://markets.ft.com/tearsheets/performance.asp? s=us:C> , the bank that financed the ill-fated £4.2bn takeover by Terra Firma, proposing a "complete restructuring of EMI" based on a new enterprise value of just £2.2bn. The letter, filed by Citigroup with a New York court on Friday, is the first official acknowledgement that Terra Firma's equity is all but worthless. Mr Hands offered to raise £lbn of new equity if Citigroup would write off £lbn of debt, before suing the bank after it turned his offer down. Mr Hands' proposal <http://www.ft.com/cms/s/0/2d1fe7b2-ecOb-11de-8070-00144feab49a.html> valued EMI Music Publishing at £1.46bn and EMI Music, its record company, at less than £800m. Terra Firma has written down its original equity by 90 per cent. The offer "would enable Citi to realise a certain and quick recovery" at a significant premium to the valuation of Warner Music, EMI's closest rival, he argued. Citi refused to write off debt without getting something in return, saying it did not see "sufficient value". The letter discloses that Mr Hands offered to split EMI in two, a move that could have ringfenced its more stable music publishing arm, protecting that part of Terra Firma's investment should EMI Music breach covenants on Citigroup's loans, as it now risks doing. Separating recorded music from musi