EMI Face Cash Problems After Federal Court Copyright Decision

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Music Company EMI, which lost a major copyright case in the Federal Court today, may not be able to pay out any damages to Larrikin Music, which sued the UK music Company last year claiming that Men at Work’s No.1 hit ‘Down Under’ reproduced a “substantial part” of the children’s folk tune ‘Kookaburra Sits In the Old Gum Tree’.Larrikin Music, which owns the copyright to the song ‘Kookaburra’, is now entitled to recover damages from Men at Work and EMI, a Federal Court judge has ruled. The only problem is that EMI is struggling to keep itself afloat, admitting this week that it needs a cash injection of over $200 million dollars just to meet loan repayments.

This week  EMI admitted that it will not be able to meet the terms of loans the took out last year with Citigroup.

According to EMI’s accounts, the company will fall far short of critical covenants on its debt when these fall due between March and December this year.

Late in 2008 an Investment company called Terra Firma paid $7.5 billion for EMI just before debt markets collapsed. Now Terra Firma needs to raise new  funds just to keep EMI afloat and Terra Firma from losing control of the company.

Currently Terra Firma is involved in a legal dispute with Citigroup, after filing a claim in New York late last year over the sale process of EMI. Legal action was launched by Larrikin’s managing director, Norman Lurie, in 2007 after the television show Spicks And Specks raised the alleged similarities of the two songs.

Larrikin sued songwriters Colin Hay and Ron Strykert and record company EMI seeking backdated royalties and a share of future profits.

Justice Peter Jacobson in the Federal Court is expected to make a decision on costs and damages on February 25th.

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