A private equity firm that paid billions of dollars for the struggling music company EMI has filed a lawsuit against Citigroup in an attempt to reclaim some of its investment.
Terra Firma Capital Partners said the New York-based bank "misrepresented fundamental facts" when it brokered the sale of EMI Group Ltd. in 2007.
In a lawsuit filed Friday at a state court in New York's Manhattan, Terra Firma said Citigroup falsely claimed there were other bidders for the record company, including the investment firm Cerberus Capital Management, when in reality all other suitors for the company had dropped out.
As a result, Terra Firma raised its bid.
The company wants Citigroup to pay damages related to the $4.9 billion takeover.
Citigroup Inc. spokeswoman Danielle Romero-Apsilos said the suit is without merit
"We will defend ourselves vigorously," she said.
Terra Firma claimed in the suit that Citigroup was motivated to lie during the EMI auction because of its unusual role in the transaction.
In addition to brokering the sale, the bank also loaned billions of dollars to both EMI and Terra Firma to finance the transaction.
The two companies have sparred frequently in recent years over management of EMI as the music company's market value has plummeted. Terra Firma claimed in the suit that Citigroup had rejected its plans for restructuring the business "as part of a deliberate attempt to undermine EMI."