The private equity owner of EMI is touting the idea of selling a minority stake in its music publishing division, which controls its back catalogue of songs, to raise more cash to avoid defaulting on its debt.

Terra Firma, which has been battling to turn EMI round since buying the UK music group for £4.2bn in 2007, is considering several approaches to acquire 49 per cent of the music publishing business, according to a person familiar with the group.

This person said one approach was from a music publishing joint venture between private equity group KKR and Germany’s BMG. However, this was denied by a person close to KKR, who said: “There are no discussions between KKR/BMG and Terra Firma about KKR/BMG buying a minority stake in EMI music publishing.”

There was also confusion around the identity of other possible bidders, with competing music publishers likely to be held back by the prospect of close regulatory scrutiny for any such transaction.

EMI has told Citigroup, its sole lender, that Terra Firma has rounded up £105m from investors to avoid defaulting on its debts for the next year.

The “equity cure” is due to be injected into EMI by June 14. However, Terra Firma is asking investors for further injections to cover shortfalls after March 2011. Terra Firma, EMI and Citigroup declined to comment.

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