The Future of EMI? Here's Roger Faxon's Memo To Staff...

1. EMI WILL GO INTO CHAPTER 11 IF IT FAILS ITS COVENANTS!!
Yes, there is no Chapter 11 in British law, and yes, “EMI is easily meeting all its debt obligations, and paying all its bills, with room to spare”. IS. Present tense. But what about NEXT YEAR? Maltby Capital has already warned investors (on Page 6 of the Annual Review) that the EMI Group needs more money to pass the covenants tests in March 2011.

2. EMI TO SELL OUT TO ONE OF ITS RIVALS!!!
Yes, a takeover of the EMI Group by one of its rivals is highly unlikely. But what about KKR/Bertelsmann or other investment companies? Or a internet/technology-company with enough money to play around?

3. EMI TO SELL OFF CATALOG ASSETS TO STAVE OFF FINANCIAL RUIN!!!!
Yes, to sell catalog assets would indeed be “utterly idiotic”. But if there is one constant in Terra Firma’s management of the EMI Group it is the search for ways to sell off certain assets and/or EMI Music Publishing.

4. EMI TO BE BROKEN IN TWO IN SELL OFF SHOCK!!!!!
“(…) nobody at EMI is interested in that. We’re here to create long-term value”.
Does it really matter what anyone at EMI is interested in? Doesn’t the future of the EMI Group depend on what Terra Firma and the Citigroup perceive to be in THEIR (short term) interest?