Citigroup exec takes stand in EMI-buyout trial

AP News
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Posted: Oct 25, 2010 8:44 PM
Citigroup exec takes stand in EMI-buyout trial

A Citigroup banker testified Monday that he always tried to be honest in his dealings with a British private equity firm that accused him of misleading it into paying too much for the music company EMI in 2007.

The executive, David Wormsley, briefly took the stand late in the day for the start of what was expected to be several days of testimony in the trial resulting from a lawsuit brought by the private equity firm, Terra Firma.

Terra Firma and its founder, Guy Hands, say Wormsley posed as the company's best friend even as he was duping them into thinking they were in a frenzied bidding war over EMI when all other bidders had dropped out. Terra Firma paid $4.9 billion for EMI, which Hands estimates to be worth 25 percent less now.

The firm sued Citigroup Inc. last year, seeking a return of any money Citigroup was paid for the deal among other unspecified damages, including lawyer fees.

Terra Firma's lawyer, David Boies, opened the questioning of Wormsley by confronting him with some of the e-mails he wrote in late 2006 to Hands to solidify his trust.

"Principally, in my general demeanor towards him, I'd always be as truthful and honest as I could be," Wormsley said.

The trail of e-mails Boies projected onto a large screen in U.S. District Court in Manhattan showed Wormsley was coaxing co-workers to treat Terra Firma well so the company would not turn to other financial institutions to handle its deal with EMI.

"I know it may seem strange to advise you how to handle the banks, but I am incapable of not trying to get you to the best possible outcome," he wrote in a Nov. 15, 2006 e-mail to Hands.

In a Nov. 23, 2006 e-mail to a Citigroup colleague, he referenced Terra Firma's initials, saying: "For reasons I won't go into, we have to show big love to TF."

Boies completed one line of questioning by showing Hands, who completed three days of testimony earlier Monday, an e-mail Wormsley had sent an EMI executive just before the May 2007 deadline to bid in the auction for EMI.

In it, Wormsley said he had reinforced to Hands that he "should not play games on price." Then he quoted Hands saying: "I hear you."

Boies asked Hands: "How would you have felt if you saw this in May 2007?"

"Completely betrayed," Hands answered.