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Terra Firma could push for seven billion if it wins Citi lawsuit
By CMU Editorial | Published on Thursday 14 October 2010
Gary ‘The Guy’ Hands reportedly wants seven billion pounds in damages from Citigroup over the whole EMI shambles. Which is rather a lot. He could buy two more major music companies with that, and run them into the ground too. Only joking.
Actually, these reports are even more speculative than normal, but commentators reckon that if Gary’s Terra Firma wins its upcoming legal action against bankers Citigroup the equity firm would push for the highest possible damages and, if the US bank was found to have acted dishonestly and without morals (with ‘moral turpitude’ to use the American legal term), that could be the £1.75 billion Hands reckons the EMI deal has cost him, plus three times that in punitive damages. Bringing us up to somewhere around the seven billion figure. It seems unlikely the case will turn out that way, but in theory it could, and commentators reckon if such mega-damages were a possibility Hands would push to get them.
As previously reported, Gary accuses Citigroup and his main contact there, David ‘The Worm’ Wormsley, of providing duff advice ahead of his audacious 2007 acquisition of EMI. Terra Firma claim Citi had a vested interest in seeing the EMI acquisition happen, given the bank was expensively advising Terra Firma and EMI, and was providing the loan to enable the deal. Citigroup denies the charges, which Gary first made after the bank refused to write off a billion of EMI’s loan as part of a debt restructuring plan.
As also previously reported, while the whole thing looks certain to head to court next week, both sides are still talking about possible settlements, recognising the court case might prove embarrassing for both the equity group and the bank. It’s thought that one deal being discussed is that Citigroup write off half its loan to EMI in return for equity in the music company. Sky News initially reported that this was a proposal made to the bank by Terra Firma, though The Guardian reckons it was the other way around, and that Gary isn’t keen on the proposal because of the control it would give Citi over the music firm.
In related news, The Guardian also has a list of the people likely to be called as witnesses once the case goes to court. A video from pre-Terra Firma EMI boss Eric Nicoli is expected to be shown, while former EMI chairman John Gildersleeve and Simon Borrows of another of EMI’s banking advisors, Greenhill & Co, will both be called to the witness stand. Though it is Gary and The Worm’s testimonies that will probably get the most attention.
Unless a deal can be struck, this all kicks off in New York on Monday.
