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Citigroup takes over ownership of EMI

US bank Citigroup has written off debt of £2.2bn in a deal which sees it take over music company EMI

The music company EMI, which was bought by a private equity firm Terra Firma in 2007 for 4.2bn, has been taken over today by the US bank Citigroup.

The bank has written off debts of £2.2bn, Terra Firma loses £1.7bn.

Terra Firma, which is headed by Guy Hands, had been loaned money by the bank in order to affect the sale four years ago.

Despite slashing costs and increasing profits from £68m to £334m, under Mr. Hands the company lost several key artists, including Mick Jagger, Radiohead, Joss Stone and Sir Paul McCartney.

The firm had been unable to keep up interest payments on loans made to it by the bank.

Numerous alternatives to prevent takeover had been put forward by Terra Firma.

These included leasing the North American rights to EMI's back catalogue, but negotiations around this collapsed.

In a statement, Terra Firma said that it was "pleased that EMI's debt burden had been reduced".

Considering the future of EMI now that is under the control of Citigroup, analysts have predicted that it will be sold off, citing a potential merger with Warner Music.

This has been criticised by EMI chief executive officer, Roger Faxon, who has stated that it is not sensible to consolidate the two businesses. "We are not going to buy the old businesses, we are going to invest in new businesses."

EMI's debts now total £1.6bn.