Terra Firma Capital Partners lost its case against Citi Thursday when a jury unanimously decided the firm had not proven its accusation that Citi banker David Wormsley lied to the firm's chief Guy Hands, tricking him into overpaying for struggling music publisher EMI.
The jury deliberated for less than a day on the verdict, which found Citi not liable of a charge of fraudulent misrepresentation. Terra Firma “reserves its right to appeal”, the firm said in a statement.
“We are disappointed that the jury found that we did not prove that we relied on misrepresentations from Citi, which caused a loss to our investors,” the firm said. “We will continue to focus on achieving the right result for them and for EMI whilst continuing to support the successful development of our other nine businesses.
“EMI itself will continue to build on its track record of the last three years, during which time it has improved its market position, achieved tremendous success with its new and existing artists, and produced remarkable growth in cash profits,” the firm said.
Terra Firma's accusation was “irresponsible”, Citi said in a statement.
“We are very pleased that the jury reached a unanimous verdict confirming what we have said from the beginning: That Citi and David Wormsley treated Terra Firma with honesty and integrity in the EMI transaction,” Citi said. “The jury's verdict makes clear that Terra Firma's irresponsible accusations of fraud were nothing more than a misguided attempt to gain leverage in debt restructuring negotiations.”
Had the jury found Citi liable, it would have then had to determine how much in damages the bank owed Terra Firma, up to a maximum of £1.5 billion. With Thursday's decision, that point is now moot.
Terra Firma acquired EMI for £4 billion in 2007.
In delivering its verdict, the jury sided with Citi attorney Theodore Wells, who argued Hands brought the lawsuit against Wormsley as a way to make up for the struggling EMI investment.
“[Hands] has lost hundreds of millions of dollars [on EMI]. He made a mistake. And what he does, he brings this lawsuit,” Wells said during his closing argument Wednesday. “Rather than take responsibility for the fact that he made a mistake, the way all of us have to take responsibility for our acts, he turned around and filed this lawsuit saying to the world, saying to his investors, 'it wasn't my fault. I was tricked. Don't blame me, blame David Wormsley'. That's garbage.”
Wells also argued throughout the almost three-week trial that Terra Firma did not have any kind of documented proof of Wormsley lying – only the word of Hands and a handful of witnesses who testified they heard second-hand about the alleged Wormsley lies.