Guy Hands’s private equity group has rounded up another $150 million from investors, which will allow it to avoid a looming default on debt held by Citigroup (C), the Wall Street Journal reports:

Mr. Hands’ success in tapping his investors hands him a victory in the latest round of his epic battle with Citi, which lent him the money to fund the leveraged buyout in 2007. With syndication markets closed as a result of the financial crisis, Citigroup was stuck holding more than £3 billion of EMI debt. The two sides have been unable to agree to a restructuring of the business, setting up a high stakes game of chicken.

The cash buys Mr. Hands nearly a year, to the end of next March, to execute on a turnaround plan for EMI, which has been buffeted by a shift in demand for music away from CD sales and the crippling debt the buyout saddled it with. Amid the problems, it has seen a number of big name artists flee the label, including Radiohead and Paul McCartney.

Bigger question: Does it really matter if one of the big music labels is owned by a private equity group instead of a bank? Maybe not. There’s still a good chance that EMI will end up getting broken into parts and sold off to rivals like Sony (SNE) and Warner Music Group (WMG).

Merrill’s hire in April 2008 was supposed to represent EMI’s willingness to break free from its old CD-based businesses, and a breath of fresh air. Merrill, who had formerly been Google’s (GOOG) CIO, cheerfully admitted that he had no background in the music business.

But it’s not clear what, if anything, Merrill was able to accomplish since he moved to EMI. On the other hand, it’d be hard to imagine any single executive being able to make much impact at EMI or any other label, given the industry’s accelerating decline.

Meanwhile, Guy Hands, the private equity executive whose Terra Firma shop bought EMI in 2007, has had to write off half the value of his investment, and that’s probably an optimistic valuation. And earlier this month Hands himself stepped down from his position as Terra Firma’s CEO.

Here’s the internal announcement from EMI CEO Elio Leoni-Sceti:

From: Internal Communication
Sent: Mon Mar 23 19:31:21 2009
Subject: ORGANISATION ANNOUNCEMENT – from Elio Leoni-Sceti

Dear all

With digital now comprising over 20 per cent of our revenues and growing fast, and with the progress we have made in integrating all of our digital operations fully into the business, we will no longer operate a standalone digital function.

Douglas Merrill has today stepped down from his roles as President of Digital and COO of EMI New Music and will be leaving the company.

I would like to thank Douglas for his contribution and to wish him well for the future.

Digital Marketing

I am delighted to announce that Cory Ondrejka is appointed to the newly-created position of Executive Vice President, Digital Marketing, reporting initially to me and then to our new President of Marketing whose appointment we expect to announce shortly. We have been planning this promotion for Cory for some time now. In his new role he will help us deliver our goal of leveraging the power of digital across our business, particularly in the key areas of consumer understanding and analytics, content creation and digital marketing, in order to strengthen the relationship and interaction between our artists and their fans.

Cory is a highly talented executive with a passion for music and a complementary, technology-based skillset. Since he joined us from Second Life last year he has helped us create a new approach to digital that will be unique to the music industry including establishing a world-class engineering team on the West coast and instituting modern, agile software development practices and tools that are the foundations to help us transform our approach to analytics and marketing.

He will be making further announcements about his Digital Marketing team in due course.

New Music

Nick Gatfield and Billy Mann, our Presidents of A&R Labels for North America/the UK and International respectively, will join the EMI Music Executive Committee and, as members of the New Music Operating Board, will continue to support me directly in my role as President of EMI New Music.

Under their leadership, EMI is building very strong creative momentum. In the last four weeks alone their A&R Labels teams around the world have signed 14 new artists, three in the US, four in the UK and seven in the rest of the world.

Digital Supply Chain/IT

Peter Baker, VP, Digital Software Engineering, and Dan Levine, VP, Digital Product Development, who have been leading the work on our Digital Supply Chain, now report to Ronn Werre, President, EMI Music Services. Ronn will be making the Digital Supply Chain a top priority so that we can best serve our artists and our customers.

Richard Piercy, Acting Chief Information Officer, now reports to Chris Kennedy, our Chief Financial Officer. Richard will continue to oversee our global IT system which is an important strategic enabler and one that is strongly linked to our management and financial reporting requirements. Chris will ensure that IT supports the company’s strategic ambitions effectively and efficiently.

Meanwhile Mark Piibe, in his role as SVP of Digital Business Development, will report to Ronn Werre whose Music Services team now leads all deals and relationships with our digital and physical retail partners.

Building our new music repertoire and embedding digital into everything we do are key to our future success. With our growing creative momentum under strong A&R leadership and the final integration of all remaining digital functions into the business, we have a solid platform for enhanced performance in this coming year.

Thank you for your continued efforts.

All the best
Elio

He’s probably being too conservative.

At least if you use Warner Music Group (WMG) as a comp. Edgar Bronfman Jr.’s music company is (very) roughly the size of Hands’s music company and was forever slated to buy, sell to, or merge with EMI. (In May 2006, EMI was willing to pay $26 a share in cash for Warner, but Bronfman rejected the deal; a year later, EMI rejected a Warner offer.)

Take a look: WMG, currently trading at $1.86 a share, is down 86 percent since Terra Firma bought EMI in August 2007. At what point will Hands have to fess up and take another write-down? (Click chart to enlarge).

Here’s an EMI employee with no complaints about the music business–Norah Jones, whose 2002 debut album was really EMI’s last super-huge success. Those days are gone, but she’s managed to hang on to her money–or at least enough to pay $5 million for a Brooklyn townhouse a couple months ago. Check out this excellent duet with Dolly Parton (yup, that Dolly Parton).