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Terra Firma v Citigroup: I have no independent recollection
By CMU Editorial | Published on Wednesday 27 October 2010
Officially Citigroup is resolute that its top man David ‘The Worm’ Wormsley did not, under any circumstances, make three phone calls to Terra Firma chief Guy Hands in the two days before his audacious bid to buy EMI in 2007 telling the equity man, incorrectly, that a rival bidder was about to make an offer, so he should bid quick and bid high.
Though on the witness stand yesterday The Worm admitted that his memory of that weekend was a bit hazy, but he certainly had no recollection of speaking to Hands about rival bidders or such like. He told the court: “I have spent a large part of the last ten months trying to remember that call, but I cannot. I have no independent recollection”.
It seems both he and Hands can’t remember much about those crucial two days, the latter admitting in court last week that other than the phone calls with The Worm and a plate of lovely chocolate biscuits, he couldn’t remember much either. Then again, if I was about to screw over and screw up one of the world’s greatest record companies, I’d probably block out those events. This is presumably how City types like Hands and Wormsley manage to sleep at night.
Yesterday was the first full day of questioning of Wormsley, the British banker who led Citigroup’s involvement in the disastrous 2007 EMI deal. As much previously reported, Terra Firma and Gary ‘The Guy’ Hands are suing the US bank claiming it misled the equity group into bidding too soon and too high for EMI.
They hold the bank responsible for the big buckets of cash that Team Terra Firma has since pissed up a wall in trying to make EMI work while servicing the music firm’s three billion pound debt to Citi, which provided the bulk of the funding for the acquisition and which has since refused to restructure that debt.
The main aim of Terra Firma’s lawyers yesterday seemed to be to embarrass The Worm in any way possible, mainly by pulling out a string of emails he had written at the time of the EMI deal. It wasn’t entirely clear if this was about convincing the jury of Citigroup’s guilt, or just an effort to embarrass the bank while the world is watching, possibly recognising that Hands’ performance in court last week wasn’t great and that many commentators reckon this trial will ultimately go in the bank’s favour.
That said, there was some logic to the Terra Firma legal team’s approach.
Basically, they showed how pissed off Wormsley had been when EMI, a long term client of Citigroup, brought in a rival City firm called Greenhill to help advise on the plans to sell the company. With Greenhill installed, in order to get an invite to the EMI big sale party that he believed should be his to host, The Worm needed to be the man who found the buyer.
Enter Terra Firma. Following this logic, the accusation is basically that The Worm sold his old friend Gary and his team of Terra Firma dudes down the river to ensure that he and his bank got a cut of the EMI sale action. Once again Terra Firma’s lawyers showed that, while assuring Hands he was operating 100% in his favour, The Worm was sidling up to the EMI top guard and telling them he could “deliver serious added value to any discussion”.
It is thought that today Terra Firma’s lawyers will try to show what The Worm himself had to gain in ensuring he engineered the EMI takeover, mainly by persuading the judge to let them reveal to the jury the banker’s 2007 pay packet, including bonuses. Yesterday the banker said that his bonus that year did not include a payment directly linked to the EMI deal, though he conceded that he could not be certain the transaction “did not form any of the basis for my compensation”.
Citigroup continues to assert that its man Wormsley did not mislead Guy Hands, that the phone calls crucial to Terra Firma’s case never took place, and that The Worm’s words did not cause the equity group to bid too soon and too high. Pursuing that line, Wormsley yesterday told the court that his role in the deal was primarily in putting together that infamous three billion pound loan rather than providing in-depth advice to Gary on how and when he should bid, though he did admit telling the equity man not to “play games” on price when making his offer for EMI.
The case continues.
