After Sony Music and Universal Music Group both walked away from licensing deals with EMI, the music company is left scrambling for a way to raise money to avoid defaulting on its loans. The label had hoped to license the rights to distribute its music in the Americas for about $300 million, and then use the cash to meet its debt requirements with Citigroup. However, without a distribution deal, EMI and its owner, Terra Firma, will have to figure out another way to inject money into the company and keep it from falling into the hands of lenders. Terra Firma needs to come up with about $160 million by June 14 in order to prevent EMI from defaulting, and if it fails, Citigroup could take control of the label. Sources believe Citigroup would be quick to put the company up for sale if it takes control, according to the U.K.'s Telegraph.

The pressure is now on new EMI boss Charles Allen to formulate a business plan that Terra Firma boss Guy Hands can use to persuade investors in the next few months to sink more money into the company, says the New York Post. The paper also said that despite reports that EMI is already in default, a source said the results of the test to determine whether the label is in compliance won't be known for several weeks.

EMI's music publishing arm is thought to be worth about £1.2 billion, and its recorded music business is more difficult to value. Both divisions are putting together five-year business plans that will include future trading and profit projections, says the Telegraph.

Via FMQB