Beatles Boost EMI. (But About That Debt…)

First, some good news for EMI Music Group, the big music label that’s troubled even by the music industry’s troubled standards: They still have the Beatles.

And it turns out that people still care about John, Paul, et al.

EMI says it has sold a staggering 10 million copies of the band’s remastered albums since September. The total includes the giant box sets of the band’s work (if you bought the stereo set, that accounted for 14 albums in one purchase; if you went with the mono discs, that counted for 11), as well as downloads for the sort-of successful Beatles Rock Band game.

And, of course, nada from iTunes. Sidebar: If and when the band finally starts selling its music on Apple’s (AAPL) digital storefront, will there be anyone left to buy it?

But back to EMI, which has much more unpleasant news to deal with, namely that owner Terra Firma seems to be at the end of its rope. The private equity firm is now suing Citibank (C), which lent it the billions it needed to buy the music company in 2007, for fraud.

And Terra Firma is reportedly looking for investors to lend it another $1.6 billion to keep the company afloat, in large part because it fears it will default on the money it has already borrowed from Citi.

The conventional wisdom, meanwhile, is that all of this is simply a precursor to an eventual combination between EMI and Warner Music Group (WMG)–a deal the two companies have been trying to pull off for close to a decade.

Terra Firma’s complaint, via the New York Times’s Dealbook, makes for fascinating reading, in large part because of the cognitive dissonance created by Terra Firma’s description of itself.

The company describes itself as a clueless investor duped by Citigroup into buying the music company in an auction with no other bidders and as a savvy manager that has turned around the ailing music company.

Can both descriptions be true?

Terra Firma’s Lawsuit Against Citi Over EMI

(Also, some free fact-checking for Terra Firma’s attorneys: The iTunes Store launched in 2003, not 2005.)