EMI is hoping to cut up to £20 million from its £95 million annual interest bill by mortgaging Singin’ in the Rain and the rest of its million-plus song catalogue.

The plan will allow EMI to refinance about £700 million to £1 billion of debt, cutting its borrowing costs by two percentage points —up to £20 million.

EMI said in a trading statement that it hopes to complete the complex exercise “by the end of this year” by striking mortgage agreements in every big territory. Although no leading music company has undertaken a securitisation before, the much smaller Chrysalis, owner of material by David Bowie, has long mortgaged its catalogue. The arrangement takes advantage of what is considered a dependable future profit stream, generating income from airplay and live use as well as sales.

The British group is the world’s leading music publisher and the No 3 recorded music company, owning the rights to the Motown catalogue, with a market share of about 20 per cent. It needs to generate further cost savings amid a collapsing market and mis-firing releases, such as Robbie Williams’s Rudebox.

The company is assuming that global music revenues will decline by between 4 per cent and 8 per cent this year, despite 40 per cent digital gains.

Eric Nicoli, EMI’s chief executive, is not understood to have had any further merger discussions with Warner Music since the American company proposed a £2.1 billion, 260p-a-share offer six weeks ago.

Warner, though, is likely to study the figures carefully to see if it justifies a further approach. EMI shares rose 10½p to reach 225¾p. Warner Music eased 41 cents to $16.56.

EMI said that recorded music sales were down 15 per cent last year, as per its February profits warning, although music publishing revenues, traditionally a lagging indicator, were “broadly flat” for the 12 months to March.

Underlying earnings were £174 million, down 16 per cent on last year’s £207 million. To conserve cash, the board agreed to eliminate the final dividend, saving £48 million.

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