EMI dispute headed for regulator

Speaking exclusively to PW , trustee chair Clive Gilchrist said that despite prolonged negotiations about the size of EMI's defined benefit pension deficit, an agreement is nowhere in sight.

As a result, the quarrel looks likely to come before the panel, called together by the regulator but comprised of independent legal and business experts.

"There's always a range of deficit sizes in these sorts of disputes. In this case, the employer picks the most central assumption," said Gilchrist.

"The regulator requires [the trustee board] to be cautious, however. We don't want to link the liabilities to anything other than gilts, because if it all goes wrong and we are forced to seek a buyout, gilts are what insurance companies use to measure liabilities."

Sources suggest Terra Firma believes the deficit to be just £10m in size, which it claims could be wiped out by investing in high-yielding assets.

But EMI's parent company Maltby Capital, set up by Terra Firma to facilitate the acquisition of EMI, estimates the deficit is £100m.

Gilchrist declined to comment on how big the trustees believed the deficit to be, but admitted it "could be in the range of the Lane Clark & Peacock figure of £250m", if not bigger.

EMI's most recent financial results showed it to have £850m assets under management and liabilities of around £1bn.