Citigroup banker explains memory lapse in EMI deal

AP News
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Posted: Oct 27, 2010 6:50 PM
Citigroup banker explains memory lapse in EMI deal

A Citigroup banker who went to the opera with the founder of a British private equity firm long after it purchased music company EMI in 2007 said Wednesday he was shocked when the firm sued him last year over the deal, claiming he was tricked into overpaying.

The banker, David Wormsley, told a civil jury in U.S. District Court in Manhattan that he had no warning that Guy Hands of Terra Firma Capital Partners would sue, demanding Citigroup give back what it made from the $4.9 billion EMI purchase.

Hands accused Wormsley of fooling him into believing Terra Firma was among multiple bidders for EMI in May 2007 when the firm actually was alone.

Wormsley called the lawsuit a "total shock" because Hands had never told him that he thought he had lied to him. He said that when he first learned of the lawsuit, he tried to remember the details of his role in the acquisition but found it to be a "great blur" because he had a limited role in trying to arrange financing.

He insisted during more than two days on the witness stand that he did not know that Terra Firma was alone in its bid until after the auction.

Wormsley testified that he and Hands remained friends well after Hands was notified in an e-mail in September 2007 that Terra Firma was the only bidder.

He said that he and Hands, along with their spouses, went to the Royal Opera House in London in June 2008. He said he also was invited to Hands' home in Italy for a January 2008 social gathering and to a house party and pheasant shoot in August 2007.

Wormsley said Hands had described his disappointment over the EMI deal.

"He certainly expressed great reservations about whether it was going to be a good deal," Wormsley said. "What he found when he got in there wasn't what he expected."

Theodore Wells, Wormsley's lawyer, reminded Wormsley that he had seemed in his testimony a day earlier to not be able to recall details about the deal dozens of times, and he suggested it was because Wormsley had been given a small role in the deal.

"In the United Kingdom, do they have the phrase `kicked to the curb?'" Wells asked. Then he told Wormsley: "They pushed you out."

"That's correct," Wormsley responded.

At one point, Wells referenced the December lawsuit filing, asking: "No advance notice?"

"None at all," Wormsley said.

Last week, Hands testified that he filed the lawsuit only because he believed he had no alternative.

"From a business point of view, the reality is, our business relies on banks. Suing your banker is something you would only do as a very, very last resort," he said.

"David Wormsley is someone who's a friend, someone who we'd worked with very successfully over a very, very large number of years, and to, you know, sue someone who is a friend and you've worked with successfully is a difficult, difficult thing," he said.