PARIS — EMI Group, the British music company, said yesterday that it had been taken over by its biggest lender, Citigroup, only weeks after EMI’s former owner, the private equity firm Terra Firma, lost a high-stakes lawsuit against the bank.
EMI said Citigroup swapped debt for 100 percent of EMI’s share capital, reducing its debt to $1.9 billion from $5.4 billion.
The move is the latest twist in a turbulent saga for EMI, the smallest of the four major record companies. EMI was taken over by Terra Firma, the investment vehicle of British financier Guy Hands, for $6.8 billion in 2007. That price turned out to be vastly inflated, as EMI lost ground to rivals and the overall music market slumped.
Terra Firma could not be reached for comment.
Hands sued Citigroup, saying his advisers at the bank had tricked him into overpaying by leading him to believe that there was a rival bidder for EMI. In November, a jury in New York cleared Citigroup, leaving EMI with few options.
Citigroup’s move to seize EMI may have been accelerated by news last month that Warner Music Group had hired Goldman Sachs to explore its strategic options. Those options included a sale of Warner, a possible purchase of EMI from Citigroup, or a sale of one or both music companies to another bidder.
A previous proposal to combine EMI and Warner, in 2000, was scrapped because of regulatory opposition.