US judge to rule in days on trial over EMI dispute

* Buyout house Terra Firm sued Citigroup in 2009

* Judge tells lawyers to expect ruling by Sept. 15

By Grant McCool

NEW YORK, Sept 10 (BestGrowthStock) – Citigroup Inc (C.N: ) and Terra
Firma Capital Partners Ltd [TERA.UL] will know by Sept. 15
whether their dispute over the buyout house’s 2007 acquisition
of music group EMI will proceed to trial, a U.S. judge said on
Friday.

Lawyers for Citigroup argued in Manhattan federal court for
summary dismissal of a 2009 lawsuit by Terra Firma accusing the
bank of inflating the price of EMI Group Plc [LNDONE.UL] by not
revealing that the only remaining bidder, Cerberus Capital
Management, had withdrawn from the auction.

Terra Firma bought out EMI for more than 4 billion pounds
($6.26 billion).

Its lawyers say that during the final days of the 2007
auction of EMI, the head of Citi’s UK investment banking
business, David Wormsley, made false statements to Chief
Executive Guy Hands and that Terra Firma relied on those when
deciding to buy.

“I will give you a bottom line ruling by next Wednesday,”
Judge Jed Rakoff said after almost two hours of oral arguments
on the motions for and against the case proceeding to a jury
trial. The judge has set a working trial date of Oct. 18.

The deal at the height of the buyout bubble has come to
epitomize the worst aspects of private equity deal-making, with
a high debt burden and a weak performance crippling the
business.

Three weeks ago, EMI’s parent company said further equity
injections may be needed, particularly in 2011, as the music
group continues to struggle under the weight of its debt in
spite of an improved trading performance. [ID:nLDE67H0JS]

The music business, controlled by Hands’ buyout firm,
generates enough cash to cover interest payments on its 3
billion pound ($4.69 billion) debt burden, EMI parent company
Maltby Capital said in its annual report. However, it needs to
address banking covenants that will tighten steadily over the
coming years.

Terra Firma has been fighting to keep the business out of
the clutches of lender Citigroup after breaching the terms on
its debt.

The case is Terra Firma Investments vs. Citigroup, U.S.
District Court for the Southern District of New York, No.
09-10459
(Additional reporting by Simon Meads in London; Editing by
Richard Chang)

US judge to rule in days on trial over EMI dispute