Unsurprisingly, Citigroup is trying to stop take two of Terra Firma’s litigation relating to its 2007 acquisition of EMI from getting to court.
As so many times before reported, Terra Firma’s acquisition of British music company EMI in 2007 went horribly wrong, mainly because it was a debt-laden takeover completed just before the credit crunch, making it impossible for the Terra Firma-owned EMI to succeed financially, even after rapid downsizing.
Citigroup, which provided the multi-billion dollar loan to help fund the acquisition eventually repossessed the music firm and split it up for sale, selling the recordings side to Universal and the publishing side to a Sony-led group.
As its EMI adventure ran aground, Terra Firma sued Citigroup, which had advised on and helped fund its big music deal, but which also worked for the EMI Group before the acquisition. Terra Firma and its boss man Guy Hands said that the bank had had a conflict of interest, and had misled them about the EMI sale as a result.
Had Citigroup not provided the supposedly misleading information, Hands would probably have never bought EMI, he argued, and not lost the billions the takeover ultimately cost him and his backers.
But Citigroup denied any wrongdoing and when the case came to court the bank won, even though neither they nor Terra Firma came across particularly favourably during the hearing. But earlier this year that ruling was overturned on the basis the judge in the original trial gave the jury incorrect advice regarding some English law that was crucial to the case.
Hence Terra Firma is having another go at pursuing this vendetta. But in a court filing yesterday, according to Reuters, the bankers accused Hands of “legal tourism”, claiming that his private equity firm had already lined up separate litigation relating to this dispute to be pursued through the English courts.
This, Citigroup says, is “proof positive that Mr Hands and Terra Firma have no intention of accepting as final any decision of this court” – ie if the second court hearing in the US again sides with Citigroup, Hands would have a third try through the UK legal system.
Citigroup has already claimed in the past that this dispute should be heard in the English courts, because EMI was a British company, though previously Terra Firma has pushed for the case to be considered in America. But, given the apparent concurrent legal moves in the UK, Citigroup argued this week that the New York court “should not indulge Mr Hands’ and Terra Firma’s continuing legal tourism”.