L&L Holdings' 150 Fifth Avenue, home of EMI Music (via WikiCommons)
Guy Hands and his firm, Terra Firma Capital Partners, are suing Citigroup for $8.4 billion, accusing the bank of deceptive over the value of the troubled major label EMI. Terra Firm purchased EMI back in 2007 for around $6.3 billion, and Hands said that he was deceived by Citi's David Wormsley, who allegedly made it seem as if there was another interested buyer, Cerberus Capital Management, when there wasn't. Meanwhile, Wormsley said that Hands was known to lowball offers and professes his good intentions. The decision will be up to the nine-person jury, although the loser could very well appeal with so much money on the line.
This smells like a boom-time acquisition gone wrong, exacerbated by the tumult in the music industry. Terra Firma even apparently labeled the deal "project dice," and it came, of course, a year before the collapse of Lehman. A couple months later, EMI cut 15 percent of its staff, and the label is now in danger of defaulting on its loans to Citi. And while Terra Firma could alleviate some of the debt by winning this lawsuit, the health of the label doesn't seem like a concern.
One has to feel some pity for the staffers at EMI. I know at least some of them actually care about music.
(Full disclosure: I was an unpaid intern at Astralwerks, whose parent company is EMI, in 2008.)