It’s tough times for Citigroup. First, they force fee hikes against their customers because of mean ol’ Big Gov, then kettle and arrest them for closing their accounts, snagging some poor lady in the process. Annnnd I’m closing my account next week, legitimately. But rabble-rousing customers of their bank services don’t really give them much of a distraction, since they’re 99 cents on the dollar. However, when billions of dollars come into play, it gets their attention.
Earlier this year, Citi hostilely took over beleaguered major label EMI from the financier with the greatest name, Guy Hands, and followed up with the intention of selling off the company. Five serious bidders (Universal, WMG, Sony, BMG, and Revlon owner Ron Perelman) showed interest in bidding on either part or the whole company through one round of bidding. However, it now appears that the sale of EMI has stalled, for bidders spent most of their time watching the sexy action at Zuccotti Park cut back on their bids, especially for EMI Music, the recording arm.
The stalling point? Pension funds, the bane of all youth. Because of the sale, EMI and Citi reexamined their pension fund liabilities, and found them to be double what they were paying after making a deal with the British government last year. In the likely event that Citi splits EMI’s sale into EMI Music and EMI Music Publishing, the former would take the pension fund burden. This got music bidders Universal Music, WMG, and Perelman in a tizzy, eventually cutting back their bids in the second round.
Thus, Citi is all sad and confused like some puppy that just got weaned abruptly. They could sell EMI whole and get a bunch of tax breaks (assuming mean ol’ Big Gov don’t reform the tax code like they should), but only WMG displayed enough interest to confirm a bid for the whole company in addition to EMI Music. They could sell the company in pieces, and earn more money from two sales (especially given how much BMG and Sony supposedly want to pay for EMI Music Publishing), but they lose out on tax breaks (that they might not get anyway). Another option may be to postpone, especially given how the three major credit rating agencies, run by 20-something men with enough cocaine to supply Canada for a year, want to downgrade everyone’s credit ratings except their own at the moment, making financing tricky. But that option may be a ploy to up the bids and draw in bidders, as another bidder with a kind-of-cool name, Yamani Global Equities, sent in a whole company bid the day after official bids were due when they heard that rumor. They just don’t know what to do.
Meanwhile, below them, it has been 31 days since the occupation of Zuccotti Park began.
