Terra Firma's Hands Had Trusted Advice, Citigroup Banker Says

David Wormsley, the Citigroup Inc. banker accused by Guy Hands of misleading him in the 2007 auction of EMI Group Ltd., testified that Terra Firma Capital Partners Ltd. founder would have trusted his advice at times.

Wormsley, 50, was called as a hostile witness yesterday by Terra Firma, whose $8.3 billion suit against Citigroup is on trial in federal court in Manhattan. Wormsley spent 25 minutes on the stand before U.S. District Judge Jed S. Rakoff sent the nine-member jury home for the evening.

“There were situations in which Mr. Hands would have trusted my word and advice,” Wormsley said under questioning from David Boies, the lead lawyer for Hands and Terra Firma. “I would always be as truthful and honest as I could be.”

Boies introduced a series of e-mails sent by Wormsley in which, Wormsley testified, he was trying to strengthen the relationship between London-Based Terra Firma and New York-based Citigroup.

“I know it may seem strange to advise you how to handle the banks, but I am incapable of not trying to get you the best possible outcome,” Wormsley said in a November 2006 e-mail to Hands.

Terra Firma claims Wormsley falsely told Hands in three telephone calls on the weekend before a May 21, 2007, auction that Cerberus Capital Management LP planned to submit a competing bid for EMI, a 113-year-old music publishing and recording company based in London. Instead, Cerberus had decided not to bid, leaving Terra Firma without competition.

Photographer: Louis Lanzano/Bloomberg

David Wormsley, chairman of U.K. banking and broking at Citigroup Global Markets Ltd. Close

David Wormsley, chairman of U.K. banking and broking at Citigroup Global Markets Ltd.

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Photographer: Louis Lanzano/Bloomberg

David Wormsley, chairman of U.K. banking and broking at Citigroup Global Markets Ltd.

‘Big Love’

In another e-mail from November 2006, Wormsley tried to convince former Citigroup executive Julian Mylchreest to meet with representatives of Terra Firma in London.

“For reasons I won’t go into, we have to show big love to Terra Firma,” Wormsley wrote.

Hands, in testimony over four days that ended this morning, claimed that if he had known New York-based Cerberus wasn’t bidding, Terra Firma, which paid $6.7 billion for EMI, would have stayed out of the auction and negotiated a better price. Citigroup lent more than $5 billion in the EMI deal.

Citigroup’s lawyers have tried to show that Terra Firma’s bid was based on due diligence the firm conducted before the auction, as well as conversations with EMI’s chief executive officer and Terra Firma’s estimate of the company’s worth, and not on any information passed along by Wormsley.

Testimony to Continue

Wormsley will be back on the stand when the trial resumes today. Ted Wells, a lawyer for Citigroup, will have a chance to question Wormsley once Boies is finished with his examination.

Hands, in concluding his testimony yesterday, told jurors about his business relationship with Wormsley at the time of the EMI acquisition.

“He was a friend,” Hands said. “He was someone I trusted. He had given me good information on companies we had purchased in the past.”

Because Hands and Wormsley were designated as corporate representatives for their respective sides, they are the only witnesses who are permitted to remain in the courtroom and watch other witnesses testify.

The case is Terra Firma Investments (GP) 2 Ltd. v. Citigroup, 09-cv-10459, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York federal court at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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