The company is hoping sales will help lift the earnings-to-net-debt ratio in its recorded music business above the minimum threshold at which its bank can declare a loan default and seize control. However, the early indications are not promising, with the company losing ground in the UK. EMI's share of the album market reportedly slipped to 13.3pc from 13.4pc last year and 15.5pc in 2007.
EMI can fall back on a cash injection from a pot of money supplied by its private equity owner Terra Firma if albums sales drop short. Terra Firma's money is held by Maltby Capital, the acquisition vehicle used to buy EMI.
The real test for EMI and Terra Firma will come in March, when the money in that pot is likely to be out of reach.The company has already used the Maltby Capital fund twice. In May, £28m was paid in, and last year a £16m injection was made. A further payment to the recorded music business could boost its earnings ratio to a level in line with the banking covenants.
The music company and Terra Firma, run by Guy Hands, are pushing to refinance the loans from Citi, but the bank has ruled out such a move.
EMI paid £150m of interest in the six months to the end of September 2008, since when the rate has gone up.
After Citi rejected a proposal to waive £1bn of debt earlier this month, Terra Firma brought legal action against the bank , accusing it of misleading the private equity firm into thinking there was a rival bidder, and causing it to overpay for EMI back in 2007.
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