Moody's keeps EMI on review

Moody's Investors Service said it kept EMI Group plc's Ba3 corporate family and senior debt ratings under review for possible downgrade following the announcement that EMI's board has recommended a cash offer for EMI made by Maltby Ltd. that places an enterprise value of £3.2 billion on EMI. Maltby is a company formed at the direction of private equity firm Terra Firma.

While details of the funding structure have not been disclosed, Maltby has indicated that it will use a mixture of equity and debt to fund its bid, which could add to EMI's leverage. The transaction, which is scheduled to close in the third quarter, remains subject to shareholder approval and a counter bid remains a possibility in Moody's opinion.

The agency's review will focus on the impact of the potential change in ownership on EMI's capital structure and financing profile, the relative position of the rated instruments within the new capital structure, the outlook for the global music markets and the company's operational and financing plans beyond the current financial year.

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