EMI Bought With NYC Pensions, Terra Firma Wants Its Money Back

EMI Bought With NYC Pensions, Terra Firma Wants Its Money Back

We recently reported on some troubling developments at EMI involving employee layoffs and budget cutbacks. Well, it turns out that the company’s losses could end up affecting not just the folks who work there, but also many people employed by the city of New York.

In a bizarre twist of corporate finance, the pension funds of some NYC public employees are apparently tied to the success or failure of the British record label. It’s complicated, but we’ll try to explain:

EMI was acquired back in late 2007 by private equity firm Terra Firma. During the takeover, Terra Firma pulled $2.35 billion from its cryptically named investment funds Terra Firma II and Terra Firma III to help seal the deal. According to an article run by Billboard.biz, those funds include “pension funds, life insurance companies, college endowments and other institutional investors.” Pensions of state employees all across the nation, from Oregon to Indiana, are attached to Terra Firma’s investments in EMI. But the plight of NYC employees is being highlighted in a lawsuit Terra Firma has brought against Citigroup, the bank that brokered the EMI buyout back in 2007, for misrepresenting the deal. Terra Firma alleges it paid too much for EMI because Citigroup lied in claiming there were multiple bids for the label.

It’s certainly a tangled web. Let’s just hope a solution can be worked out so that EMI can keep making those records, and NYPD retirees can rest assured they didn’t work the beat in vain.