Terra Firma Loses Expensive EMI Lawsuit Against Citigroup

The private equity company Terra Firma has reportedly lost its lawsuit against international investment bank Citigroup over the purchase of major record label EMI.

In the lawsuit, Terra Firma chairman Guy Hands claimed that he was “tricked” by Citigroup into paying too high a price for EMI, as he was led to believe that other parties were poised to make more competitive offers. The private equity company paid £4.2 billion for the record label back in 2007, loaning £1.5 billion of this from Citigroup.

The legal battle was also fought on a personal level, as Mr Hands and the chair of Citigroup, David, Wormsley, formerly had a ten-year friendship. In addition, Mr Hands is believed to have sunk £100 million of his own money into the deal.

After drawn-out legal proceedings which no doubt cost both firms a considerable amount in legal fees (unless each had professional insurance for commercial legal expenses), a jury has found in favour of Citigroup.

As a result, and partly due to a slump in record sales and a struggle to meet loan repayments to Citigroup, the future of EMI is now uncertain.

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