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Terra Firma v Citigroup: Wormsley takes the stand

By CMU Editorial | Published on Tuesday 26 October 2010

So Gary ‘The Guy’ Hands wrapped up his testimony in the Terra Firma v Citigroup court case in New York yesterday by reminding us once again that this huge corporate barney is really a story of two men; two former best buddies who fell out spectacularly when their biggest deal together went horribly wrong. 

In their report on the proceedings, Reuters remarked how these two men were friends outside the deal making room too, taking in operas, dinner parties and holidays together. They often took their wives along, but when they make this into a movie they’ll probably gloss over that part and turn the whole thing into some kind of love affair. Everything was wonderful before EMI. Now, Gary says, he just feels “betrayed”. 

Asked one last time about his relationship with Citigroup’s David ‘The Worm’ Wormsley, who advised both Gary and the bosses of what was then EMI plc during Terra Firma’s big buy into the music business, Hands remarked: “He was a friend. He was someone I trusted. He had given me good information on companies we had purchased in the past”.

But the good information stopped with EMI, Gary claims. As much previously reported, the equity man has spent much of the last week telling a panel of New York jurors that The Worm lied about a rival bidder’s intentions regards EMI to persuade him and his equity company to bid fast and bid high. Had Wormsley not lied – in three phone calls over the two days before Terra Firma’s bid – Gary may never have sunk millions of his and his investors’ money into the sinking ship that was Electrical & Musical Industries. 

The Worm, of course, denies lying and insists he never made those three phone calls, though when he slid onto the witness stand yesterday there was barely time for him to confirm his name. Gary’s lawyer David Boies used what time there was to show just what efforts the banker had gone to in order to win his client’s trust. 

He showed the court emails between The Worm and Gary, and The Worm and his staff, from back in 2007. One of the latter read “for reasons I won’t go into, we have to show big love to TF”. Wormsley admitted he went out of his way to prove to his equity group client that he was a trustworthy guy. Asked by Boies how he did this, he told the court “principally, [through] my general demeanour toward him. I would always be as truthful and honest as I could be”. 

While Wormsley is happy to admit the lengths he went to in order to win Hands’s trust, presumably he will not concur when Boies – as he probably will today – accuses the banker of abusing that trust to get EMI’s shareholders a better deal than they really deserved, at Terra Firma’s expense. 

The case continues.