Afternoon:
15°c
Private equity boss Guy Hands today surprised the City as it emerged he is poised to re-open legal hostilities with Citigroup over his disastrous £4 billion purchase of record label EMI.
Hands, who lost control of the record label whose artists include Coldplay and Tinie Tempah in February, is planning to go to the High Court in London.
He wants to force Citigroup - his former bank lender - to explain the legal grounds that it used to seize control of EMI in a "pre-pack administration".
Someone familiar with Hands' private equity firm Terra Firma told Sky News: "Terra Firma had been meeting its [financial] responsibilities to EMI and never missed an interest payment.
"Citi has declined to provide evidence proving the basis for its decision to take control of the company."
Citigroup declined to comment but a source close to the US bank said it was not aware of any recent contact with Terra Firma and that no court papers had yet been filed.
Hands has already lost one New York court case against Citi a year ago.
He claimed then that the bank, which acted for EMI's previous owners during the 2007 sale process and lent him £3billion for the acquisition at the same time, made him over-pay.
Hands' intervention comes as the American bank is in the midst of auctioning off the celebrated British record label but it was not clear if the legal move could derail that process.
Hands' problems at EMI began soon after he took it over as its value halved in the credit crunch and it struggled with falling CD sales.
EMI's owners repeatedly breached bank convenants on the size of its debt because of the fall in the company's value - even though Terra Firma did not miss interest payments.
Citi seized EMI on the advice of administrators PricewaterhouseCoopers as the threat of another covenant breach loomed.
Terra Firma could not be reached for comment.
Reader views (2)
EMI used to be a mighty empire until the money men set about destroying it. A merger with Warner would probably keep whats left of EMI together.
- Vince London, West London, 07/09/2011 19:34
Report abuse
Taking on Citi? Good luck with that, Guy. Maybe you shouldn't have wrecked EMI in the first place, you tax-dodging philistine lol.
- Conspiracy Factualist, London UK, 07/09/2011 16:28
Report abuse
