Why EMI Is In Trouble: Guy Hands Paid Too Much

(Updated) The headlines are harsh: EMI Reports $2.4 Billion Loss. Needs $160 Million To Avoid Citi Loan Default. But after years of cost cutting, how could the home of The Beatles and Coldplay be in such dire straights? Iall boils down to a single fact England's consummate deal maker and Terra Firma head Guy Hands paid way too much money for the music group.

The numbers show EMI's once struggling music division is actually doing OK. Operating profits grew from from £56M ($89 Million US)  to £163M ($256 Million US) contributing to overall profits of almost £300M ($472 Million). That's not bad given the state of the overall state of the recording industry and the global economy.

The problem for EMI is the payments that the company has to make to Citi to service the £2.6BN ($4.1 Billion US) of debt and having to stay within the loan's solvency covenants.

More: EMI Reports $2.4 Billion Loss. Needs $160 Million To Avoid Citi Loan Default