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Sources deny Terra Firma’s Citigroup claims over EMI takeover
By CMU Editorial | Published on Tuesday 15 December 2009
Sources involved in Terra Firma’s just brilliant acquisition of EMI in 2007 have apparently contradicted claims made by the private equity clan regarding their takeover of the music major.
As previously reported, Terra Firma, used to being referred to as a “success story” prior to their misjudged purchase of the electric and musical industries, are suing their financial advisors and backers Citigroup, claiming the bank failed to provide them with vital information in relation to their 2007 EMI purchase.
In particular, they claim that in the week in May 2007 in which the EMI board had requested all takeover bids be made, the bankers failed to inform Team Terra Firma that all other bidders had dropped out of the running. That, the equity bods say, means they made a higher bid than was necessary.
They are suing Citigroup, despite the equity firm and US bank being long term business partners, because the bankers have refused to restructure (that is to say, write off a considerable amount of) EMI’s debts, all of which relate to the 2007 purchase. Terra Firma seem increasingly panicked regarding EMI’s inability to pay even the interest payments on the big Citigroup loan that the equity men saddled the major with when they bought it.
Anyway, the Financial Times has now cited sources involved in the EMI takeover of May 2007 who say that Terra Firma were not the only bidders, even at the very final hurdle. The sources say that Warner Music, who some very reliable news providers reckoned were favourites to get EMI at the time (well, we did), still had execs in EMI’s offices doing due diligence as the major’s board picked Terra Firma as their preferred bidders.
Meanwhile, it’s claimed the other main private equity bidder, Cerberus, who Terra Firma’s lawsuit specifically says had dropped out of the running before they made their offer to the EMI board, didn’t actually drop out until the day after Terra Firma had been named as the EMI bigwigs’ preferred acquirer. And even then they offered to back Terra Firma’s takeover.
Whether any of this is true I don’t know, but, as previously reported, Citigroup deny they withheld any information from Terra Firma and its boss Guy Hands prior to or during the EMI acquisition. Hands says the bank had a conflict of interest, as advisors to both him and EMI, and backers of his acquisition, because they would make more money from a higher priced takeover.
The tedious squabbling continues.
