Terra Firma’s Hands in NY trial battle vs. Citi

* Terra Firma claimed fraud over 2007 buyout of EMI

* Principal witnesses Hands and banker Wormsley in court

By Grant McCool

NEW YORK, Oct 18 (BestGrowthStock) – A fraud claim by British
financier Guy Hands against Citigroup Inc (C.N: ) over his $6.4
billion buyout of legendary music company EMI in 2007 went to
trial in New York on Monday, the two sides apparently unable to
settle their dispute out of court.

Hands and his onetime banker friend David Wormsley, one of
Citigroup’s leading European bankers whom buyout house Terra
Firma Capital Partners [TERA.UL] accuses of misleading Hands,
sat feet away from each other at their respective lawyers’
tables in U.S. District Court.

Both men kept up a personal and business relationship after
the deal, according to court papers. Then Terra Firma sued
Citigroup in 2009 claiming the bank, which backed the
acquisition with 2.6 billion pounds in loans, had committed a
fraud. [ID:nN13263886]

A nine-member jury will hear opening statements on Monday
before presiding U.S. District Judge Jed Rakoff. Hands and
Wormsley are both expected to testify. A month ago, Rakoff
ruled that Terra Firma’s claims for fraudulent
misrepresentation and fraudulent concealment could proceed to
trial.

The 4 billion-pound ($6.4 billion) deal by Hands’ Terra
Firma buyout house for EMI came to epitomize the perils of
loading companies with debt and the associated risks.

Settlement talks between Citigroup and Terra Firma broke
down last Wednesday, The Wall Street Journal reported on
Saturday, citing two people familiar with the matter.
[ID:nN16241584]

The case centers on telephone conversations between Hands
and Wormsley on a weekend in May 2007. Hands says Wormsley told
him that if he did not make a strong bid for the record
company, rival Cerberus Capital Management LP would win with a
higher offer.

Wormsley denies telling Hands of any Cerberus bid. As it
turned out, there was never a bid from Cerberus or any other
competitor of Terra Firma.

Both Terra Firma and Citigroup say they are confident of
success at the trial, which is expected to last about three to
four weeks.

Citigroup, which is struggling to distance itself from its
near collapse during the financial crisis two years ago,
reported a better-than-expected quarterly profit on Monday
[ID:nN18138072].

The case is Terra Firma et al v Citigroup et al, U.S.
District Court for the Southern District of New York, No.
10-10459.

$1 = 0.6294 pound
(Reporting by Grant McCool, editing by Matthew Lewis)

Terra Firma’s Hands in NY trial battle vs. Citi