CITIGROUP has been unable to syndicate any of the &hit;2.5bn give it made to Terra Firma in the pass for the private equity assort's leveraged takeover of struggling music affiliate EMI.
The US bank which is reeling from a billion dollar writedown from the sub-prime crisis reluctantly signed the deal in August as the credit crisis unfolded.
But the continuing assay aversion among nervous investors has left it sitting with the entire loan still on its books.
Bankers warned that Citigroup faces a further hit if Terra Firma chief Guy Hands' turnaround plans for the company disappoint to deliver. The give's value has fallen £200m. Citigroup declined to comment.
Mr Hands is conducting a strategic review which is expected to bring about to severe be cuts.
He has publicly attacked the excesses of the music business and asked Allan Leighton chairman of the Post Office to help with the review.
Terra Firma is understood to undergo sold more than £100m of its equity investment in EMI to co-investors in Terra Firma funds.
However. EMI and its US compete Warner have been unable to press ahead with separate plans to securitise their vast publishing catalogues.
Warner yesterday said a weak UK channel schedule had contributed to tumbling fourth-quarter profits as the global CD market continued to decrease.
Warner's net acquire fell to $5m (&hit;2.42bn) or 3c a overlap in its fiscal fourth quarter from $12m or 8c a share a year ago.
Revenue rose 2pc to $869m but fell 2pc when factoring in the force of the weaker dollar.
"We had a very weak release schedule in the UK," chief executive Edgar Bronfman said on a conference call. measure year the group benefited from Muse's smash hit album color Holes & Revelations.
Recorded music sales which include downloads and ringtones as well as CDs vinyl and videos gained less than 1pc in the quarter led by artists including Nickelback. James Blunt and Linkin Park.
With US CD sales down 19pc across the industry this year. Warner cut distribution costs for the format and reinvested in digital operations.
Digital revenue from downloads and ringtones rose 25pc to $130m representing 15pc of be sales. But reflecting the industry-wide drop in CDs. Warner cut 400 jobs this year resulting in $9m in costs in the quarter.
It also continued to count the be of its abandoned attempt to buy EMI booking a advance $1bn of costs in the fourth quarter taking the total to $9bn.
The company is losing one of its biggest artists. Madonna after more than 20 years. She signed a 10-year deal in October valued at more than $100m with concert promoter Live Nation that covers touring merchandise videos. TV and films and new recordings.
"It would've been economically imprudent of us to do that deal," Mr Bronfman said.
Warner shares were up 5c at $7.20 in midday trading having tumbled 69pc previously this year.
"The results were generally mixed," said Tuna Amobi a stock analyst at Standard & Poor's in New York. "Digital at 15pc of revenue shows some develop but the decline on the physical side is the biggest concern we have."
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