Report: Terra Firma denies misleading Natixis

Terra Firma, the UK buyout firm, has said it had no motive to mislead the buyers of Boxclever debt in a case that the prosecution claims shines a spotlight on the enormous pressures of City life.

UK buyout firm Terra Firma has said it did not mislead Natixis about the financial status of television rental business Boxclever, according to news agency Bloomberg.

Guy Hands:
firm denies

The buyout firm, led by Guy Hands, formed Boxclever while it was part of the Japanese bank Nomura in 2000.

Natixis had filed cases against the three companies that worked on the £748 million ($1.46 billion; €1 billion) refinancing of Boxclever in 2002: West LB, Terra Firma and Canadian bank CIBC. Natixis bought £200 million of this debt from CIBC. Boxclever defaulted on its loan payments in 2003.

A series of eleventh hour settlements led to Natixis dropping its claims against CIBC and West LB last week. West LB subsequently settled a related litigation it was pursuing against Terra Firma.

Terra Firma’s lawyer Mark Hapgood reportedly said it had no motive for deceit. “It would be naive for us to encourage investors to put money into a business that we thought was going to fail,” he said.

Natixis alleges two Terra Firma executives Paul Spinks and Quentin Stewart knew the financial model used to sell Boxclever’s loans to West LB was flawed but did not inform anybody of this.

According to UK newspaper Financial Times Joe Smouha, Natixis’ lawyer, said on Monday: “What this case is about is what life is really like in the City, where enormous amounts of pressure are put on individuals.” Smouha compared the alleged modelling blunders to the pressures which led to multi-billion Euro losses at French bank Societe Generale.