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Citi welcomes unanimous EMI verdict

November 7, 2010 at 11:55 am

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Citigroup says its trustworthiness as a bank is intact following Thursday's court victory over private equity group Terra Firma Capital Partners.

In a statement issued after the bank and its head of UK investment banking, David Wormsley, were cleared by a jury at the US District Court in Manhattan of any wrongdoing in Terra Firma's 2007 acquisition of British music company EMI Group, Citi welcomed the 'unanimous verdict'.

"We are very pleased that the jury reached a unanimous verdict confirming what we have said from the beginning: that Citi and David Wormsley treated Terra Firm with honesty and integrity in the EMI transaction," the statement reads. “The jury's verdict makes clear that Terra Firma's irresponsible accusations of fraud were nothing more than a misguided attempt to gain leverage in debt restructuring negotiations."

In a lawsuit filed last December, Terra Firm and its founder Guy Hands (pictured) alleged that Citigroup had misled the private equity firm into believing that rival Cerberus Capital Management was readying a rival bid for EMI and that Terra Firm ended up overpaying as a result. The suit had originally included four counts but three were dismissed by judge Jed Rakoff.

Terra Firm has expressed its disappointment at the ruling but says that it will now focus on securing a financial restructuring of EMI, which currently owes Citi around GBP3bn.

"We are disappointed that the jury found that we did not prove that we relied on misrepresentations from Citi which caused a loss to our investors," Terra Firma said in a statement. "We believe that this was an important action to bring and that we had a responsibility to our investors to bring it."