OK, old timers, here we go again.
Remember EMI? It was a record company and music publisher. Remember Guy Hands? He was the city geezer who bought it in 2007. Remember Terra Firma? That was the geezer’s private equity firm, which had grand plans for the British major that consisted mainly of running the whole operation into the ground. Remember Citigroup? That was the bank that tricked the old Guy into pissing his cash up the EMI tree to start with.
Or did it? Well, no it didn’t, if you believe a 2010 ruling in the New York courts, where Hands was unsuccessful in suing the wanker bankers at Citi over his claim that its executives misled him during the EMI sale in 2007. Among other things, the Terra Firma chief claimed that Citi man David Wormsley lied about another bidder for EMI, which made Terra Firma rush to a decision to acquire the music company.
Citigroup was also working for EMI at the time, and stood to gain from the massive loans it provided to help fund the deal. It was the massive and highly public Citi loans, which helped finance Hand’s audacious EMI acquisition, that ultimately led to the major music firm’s downfall, even more so that the misguided buffoonery of the Terra Firma twonks. Post-credit crunch Hands couldn’t restructure the debt, leaving him with one massive and increasingly tetchy creditor, which ultimately repossessed the business.
Although Citi prevailed in the 2010 court case, an appeals court subsequently ordered a retrial, stating that Terra Firma’s EMI purchase was an English deal subject to English law, and some technicalities of the English legal system had not been properly handled in the New York courtroom. Eventually everyone agreed that, with all that in mind, it was probably better to stage take two of this dispute in an English court.
That was agreed in, erm, October 2014, with June 2016 then being set as the date for the initial hearing in London, because those city boys have very busy diaries don’t you know. And so, it is, that Hands, now somewhat removed from his disastrous dabblings with the music industry, is set to return to court to again accuse Citi of tricking him into buying bloody EMI.
In the 2010 case, his testimony consisted mainly of a discussion about biscuits. Well, OK, maybe that’s the only bit we remember, but in this new hearing we expect to hear both the key allegations made in 2010 against Wormsley and the big bad bank, and some extra claims too. It’s also worth noting that the Worm isn’t the only accused banker this time, with other then Citi execs also named as defendants.
Ahead of the new court case, a spokesperson for Terra Firma told Billboard: “This is a new trial, with new evidence and new allegations of fraud against Citi regarding the sale of EMI. We look forward to an English court considering these serious claims under English law. We will not comment further at this time”.
In addition to alleging that Citi misled Hands about another bidder for EMI, forcing him to bid too early and too high, Terra Firma will also claim that the bankers gave it false assurances about the financial health of the music company as of 2007. The equity types will also present emails sent between Citi execs at the time of the sale seemingly concluding that Hands had just done a dud deal, unless he had some secret knowledge not possessed by the bankers.
The emails include things like “Well done! I am amazed you got them to pay up for that old pup”, and “thanks – can’t imagine why Guy bought it – he must have a Machiavellian plan”, and “at long last you sold the pig”. Given these viewpoints within Citi HQ, Terra Firma will argue, why wasn’t Hands cautioned by his advisors at the bank.
Citi will deny all of Terra Firma’s claims, and has already dismissed the emails presented in pre-trial evidence as being between bankers not involved in the financing talks back in 2007. The new court hearing will get under way later today and is expected to run for about six weeks. Those tuning in will have to provide their own biscuits.