In the News has been following the fortunes (or not as the case may be) of the music publishing and recording company EMI over the past few years. In 2007 EMI was bought by a private equity firm, Terra Firma, under the control of Guy Hands, seen as one of the leading entrepreneurs in the private equity industry.

Since that time the company has struggled to come to terms with a changing market and consumer behaviour against the backdrop of £4 billion in debt. There have been numerous changes to the structure of the business and some debt has been paid off but £3.4 billion is still owed and Mr Hands has come under increasing pressure to meet the demands of creditors. Yesterday Mr Hands finally accepted defeat and the US bank Citigroup took control of the business.

The acquisition by Citigroup arose when it became clear that EMI would have to default on loan covenants (conditions that the borrower enters into as part of a loan agreement) and had failed a solvency test. Having acquired EMI, Citigroup is likely to have to write off loans it has made to the company - reportedly in the region of over £2 billion. It is now expected that Citigroup will try and sell EMI but will need to raise more than £1.5 billion from the sale to make any return from its investment. Whether there will be any buyers out there willing to pay that sort of money in such a fast changing market and given the track record (no pun intended) of the company over the past four years, is open to question.