Hundreds of jobs at EMI are at risk as Terra Firma, the music group’s private equity owner, considers cuts in the workforce and a sell-off of its CD distribution unit.

A spokesman for Terra Firma said that it was conducting a strategic review of EMI’s operations and would announce the outcome in January or February.

No firm decisions have been taken on what could be a radical restructuring, but the spokesman refused to rule out significant job cuts and said that “anything and everything is a possibility”, including a sale of the physical music distribution business.

Not all of EMI’s units are at risk of being sold. Guy Hands, the chief executive and founder of Terra Firma, said recently that he planned to retain EMI’s two key units – recorded music and music publishing.

The spokesman reiterated yesterday that Terra Firma had no plans to sell either of these divisions. However, it is understood that job cuts at both are being considered.

It is also understood that Mr Hands is looking to dilute Terra Firma’s equity stake in EMI and has met representatives of a number of private equity firms and hedge funds. As part of Terra Firma’s £2.4 billion acquisition of EMI this year, the group poured in £1.5 billion of equity.

The spokesman confirmed that the group had held talks with the financial community, but said that this was not unusual for private equity deals of this size: “This is normal course of business - all major private equity deals are syndicated in this way.”

Sources close to Terra Firma said that there had been considerable interest from the private equity and hedge fund communities. The spokesman said that Terra Firma intended to retain a majority stake. The British-based music company’s artists include Coldplay, Robbie Williams and Norah Jones. It also owns back-catalogue rights for The Beatles and the Rolling Stones.

Terra Firma has said that it plans to exploit the opportunity to develop EMI’s publishing catalogue, while streamlining its recorded music business and making it more focused on digital revenue streams.

EMI has come under pressure this year because of its poor release schedule and ongoing problems within the industry such as internet piracy.

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