And Finally Beef Of The Week

CMU Beef Of The Week #39: Terra Firma v Citigroup

By | Published on Saturday 16 October 2010

This is possibly more the beef of next week, but it’s all been hotting up recently, as equity firm Terra Firma and Citigroup, the American bank which loaned them £3 billion to buy EMI three years ago, attempt to reach a deal to stop a legal battle relating to the music company takeover going to court on Monday.

Terra Firma and its top man Guy Hands (pictured) will face the American bank and Terra Firma’s main advisor there, David Wormsley, in a New York courtroom. Hands claims Wormsley gave him bad advice ahead of Terra Firma’s audacious takeover of EMI in 2007, partly because Citigroup was representing both the equity group and the music company at the same time.

That said, the legal fight only began last year after Wormsley reportedly failed to agree to Hands’ plans to restructure EMI’s multi-billion dollar debts to Citigroup, debts caused by the 2007 takeover. Those plans seemingly involved Citi writing off a billion or so of the debt in return for a commitment by Terra Firma to inject new cash into the flagging music giant.

While the whole thing now 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 Hands isn’t keen on the proposal because of the control it would give Citi over the music firm.

If you’re interested in following this battle – which some business journalists have dubbed the ‘trial of the century’ – then the CMU Daily bulletin will be covering it closely from next week. To get that delivered to your inbox via email every week day, head over to You can also follow all the Terra Firma v Citigroup action, and read about everything else happening in the music biz, at

This Beef Of The Week comes from this edition of the CMU Weekly. Subscribe to the CMU Weekly here.