EMI Sale Timeline Legal

Terra Firma v Citigroup: It’s all in three phone calls

By | Published on Monday 27 September 2010

According to City AM, when EMI owner Gary ‘The Guy’ Hands goes to court next month to try and have his bankers Citigroup severely beaten around the head with spanners, his case will rely on three phone calls that he claims to have had with the head of the US firm’s investment banking division David Wormsley back in 2007.

As previously reported, Hands claims Citigroup gave him dud information and advice ahead of his equity group’s audacious acquisition of the flagging London major. The equity man says Wormsley incorrectly informed him a rival bid was about to be made at 262p a share, and then badly advised him to better that offer by bidding 265p a share.

Hands argues that had he not received this bad info and tip he may not have bought EMI at all, or certainly not at the price he paid for it. He adds that Wormsley had a vested interest in seeing the EMI takeover happen, because Citigroup earned fees on the deal and on the multi-billion dollar loan they provided to enable it to happen. That loan continues to cripple EMI three years on, and requires Terra Firma to keep having to pump more money into its music asset.

Hands will say that Wormsley provided this dud information in three separate phone calls shortly before Terra Firma made its offer for EMI. Citigroup isexpected to argue that one of the three phone calls never took place, and that while Wormsley did call Hands on the other two occasions, he did not get through and left voicemail messages.

The banks lawyers are expected to show phone logs showing that Wormsley’s calls were only thirty seconds long, as well as records of Hands’ private jet journeys which, they say, coincide with the alleged phone conversations and explain why the banking chief couldn’t get through to the equity dude.

The court case is due to start on 18 Oct.

For legal reasons, we must stress that Gary has not requested the bosses of Citigroup actually be beaten with spanners, even if he wins his litigation. It would be more of a metaphorical beating with spanners, you understand. You know, like the beating EMI staffers must experience every time they receive a memo from the top.



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