RETURN TO TENDER IS EMI TAKEOVER TUNE

The $4.8 billion takeover of EMI Group by private equity firm Terra Firma Capital Partners was extended again yesterday after a tender offer for shares in the world’s third-largest music company came up 5 percentage points short.

Terra Firma pushed back its offer deadline until Wednesday after it got only 85 percent of EMI’s shareholders to tender their shares as of yesterday’s deadline, the firm said.

Terra Firma needs at least 90 percent support to secure financing for the takeover.

The deal is expected to go through, but the refusal of Citigroup and other lenders to finance the deal without 90 percent of the shares tendered is another sign that the days of cheap and easy credit are gone for now, analysts said. Under a longstanding tradition, most banks will waive the 90 percent threshold if the bidder can garner at least 80 percent of shares.

More than 40 companies worldwide have reorganized or abandoned borrowing plans in the past month. That has forced banks to take on at least $32 billion of debt and threatens to bring an end to a record run of leveraged buyouts, which topped $690 billion this year.

Many believe Terra Firma, run by European financier Guy Hands, is making an extremely risky bet on the music industry, which has been in a free fall for the last few years

The firm’s offer values EMI at roughly 19 times cash flow, even though the recorded music market has declined precipitously since 2004.