Citi made four false statements in EMI sale-lawyer

* Closing arguments of trial for British buyout house

* Word of Terra Firma founder against word of Citi banker

* Jury of ordinary New Yorkers to decide truth of case

By Grant McCool

NEW YORK, Nov 3 (BestGrowthStock) – Citigroup Inc (C.N: ) banker
David Wormsley made four false statements to Terra Firma chief
Guy Hands about the 2007 bidding for music company EMI, Hands’
lawyer told jurors in closing arguments of a civil fraud trial
on Wednesday.

The three-week-long trial in U.S. District Court in New
York has centered on phone conversations over a May weekend
between the two onetime friends and emails and testimony by
executives — a window into the high-pressure,
multibillion-dollar stakes of the EMI sale.

Hands, 51, testified that he and other executives of his
private equity firm scrambled to complete financing for a bid
of 265 pence per share for EMI based on Wormsley having told
him about a rival bid by Cerberus Capital Management of 262
pence per share. There was no other bidder.

“Obviously, he couldn’t have made it up if he told other
people at the time,” Terra Firma’s lawyer, David Boies, told
the jury of eight ordinary New Yorkers who will decide who is
telling the truth. “Please, ladies and gentlemen, give the
words written and said in 2007 their ordinary meaning, not the
interpretation for the purposes of this litigation.”

Citigroup trial lawyer Ted Wells will make his closing
arguments later on Wednesday. In his trial testimony, Wormsley,
50, one of Citi’s top European bankers, denied lying to Hands.

Terra Firma paid 4 billion pounds ($6.4 billion) for EMI, a
struggling company that is weighed down by its debt. It has
become a symbol of the risks taken in leveraged buyouts during
the credit boom.

If Hands, the outspoken British buyout house boss, loses at
trial, Terra Firma may be forced to hand over EMI to Citigroup,
its main creditor bank.

Citigroup, which had business ties to EMI and Terra Firma,
provided 2.6 billion pounds ($4.1 billion) in loans for the
acquisition. Citigroup’s reputation as an honest broker in such
deals could be damaged if the jury finds that the bank
defrauded Terra Firma.

Boies pointed to a large-screen display in the courtroom,
under the headline “four false statements” by Wormsley: that
there was an active auction for EMI; Cerberus was ready to bid
262 pence per share; Terra Firma should bid higher in order to
win and EMI accelerated the auction by two days to May 21, a
Monday, at the request of another bidder.

Citigroup has argued at trial that Hands had buyer’s
remorse and did not sue the bank until December 2009, more than
two years after the August 2007 closing of the deal. Hands told
the jury that the lawsuit was a last resort.

The private equity firm initially sought $8 billion in
damages, but in rulings during the trial, presiding Judge Jed
Rakoff has effectively reduced the potential damages against
the bank to about 1.5 billion pounds ($2.4 billion).

The judge said punitive damages should not be considered by
the jury in its deliberations. Rakoff described the dispute as
“a cat fight between two rich companies” and there was no
threat to the public, a threshold for punitive damages under
the law. [ID:nN01181242]

And in a bizarre twist to the trial on Tuesday, a juror
whose name appears in credits of filmmaker Michael Moore’s
movie critique of the U.S. financial industry, “Capitalism: A
Love Story,” was removed by the judge. Rakoff said he believed
the juror lied to him when he questioned her about hearing she
had discussed the case in a courtroom elevator, which is not
allowed. The juror denied talking about the case in public, but
was excused anyway. [ID:nN02239726]

The case is Terra Firma et al v Citigroup et al, U.S.
District Court for the Southern District of New York, No.
09-10459.
($1 = 0.620886 pound)
(Reporting by Grant McCool, editing by Matthew Lewis)

Citi made four false statements in EMI sale-lawyer