LICENSE TO DEAL?

With an apparent “test” of its Citigroup covenant coming due this week, Guy Hands’ Terra Firma is furiously trying to make a deal to save its investment in EMI Music by showing it can raise some cash quickly.

Despite the WSJ report this morning (which you can read about here), Universal Music Group and Sony Music Group have both now re-kindled talks with EMI Music to license its catalog.

The deal bandied about is for five years and $300 million, according to those close to the negotiations, and includes just North and South America at this point.

Hands is hoping that will be enough to stave off Citigroup’s takeover of the company.

Again, countering the WSJ report that a licensing deal would all but shutter EMI Music’s U.S. operation, sources insist: “For the deal to make sense moving forward, EMI must be a functioning company that signs new acts and will be involved in marketing that music.”

Maybe not so surprisingly, the only company sitting out the current negotiations is Warner Music Group, thought of all along to be the front-runner to acquire EMI Music. Perhaps they’re just waiting around for Citigroup to come in and offer it (as a whole or in parts) at what is sure to be a fire sale, maybe relying on bank board member Richard Parsons to steer it their way.

Stay tuned, folks.