Citigroup Banker Testifies He Didn't Give Hands Bid Information

David Wormsley, the Citigroup Inc. banker accused of misleading Terra Firma Capital Partners Ltd. about an auction for EMI Group Ltd., denied giving bid information to the firm’s founder, Guy Hands.

Wormsley testified yesterday in a federal court trial in New York that he didn’t remember many specifics of the sale because he had been sidelined -- “kicked to the curb,” in the words of Citigroup lawyer Ted Wells -- as an adviser on the deal by EMI in favor of Greenhill & Co.

“I played a very junior role in this transaction,” Wormsley told jurors at the start of a second full day of testimony.

Wormsley, 50, who was called as a hostile witness by Terra Firma, testified under questioning by Wells that he played only a minor role in the deal, confined to working on the financing. He said he never told Hands to bid 2.65 pounds ($4.17) a share for EMI, or that Cerberus Capital Management LP planned to make a competing offer of 2.62 pounds a share, as Hands claims.

Hands, who testified over four days, claims Terra Firma was forced to overpay for EMI, which has lost money since the deal, because Wormsley misled him about the bidding in three telephone calls during the weekend before the auction on Monday, May 21, 2007.

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.

Cerberus didn’t bid, leaving Terra Firma without competition in the auction for the 113-year-old music publishing and recording company based in London. Terra Firma claims that if it had known the truth, it would have sought more information about EMI’s business and finances and negotiated a lower price.

Citigroup Financing

Wormsley testified earlier that he and Hands discussed only Citigroup’s financing of the deal, denying, under questioning by Terra Firma lawyer David Boies, that they discussed details of the Terra Firma bid.

In his testimony on Oct. 26, Wormsley repeatedly said that he didn’t recall details of his conversations with Hands in the days leading up to the bidding.

“On numerous occasions you responded ‘I don’t recollect,’ right? Twenty or thirty times,” Wells asked him yesterday. Wormsley agreed when Wells asked him if part of the reason he didn’t remember was that he had been pushed aside by former EMI Chairman John Gildersleeve and Simon Borrows of Greenhill.

‘Go-Between’

Wormsley characterized his role in the deal as a go- between, fielding calls from Hands, who was pushing the Citigroup financing team to line up the 2.5 billion pounds that would be necessary to bid on EMI in just 14 days.

Wormsley testified that he first learned that Terra Firma questioned his role in the EMI deal when it sued Citigroup in December. Hands, who testified that he and Wormsley were friends and business associates, never complained to him, Wormsley said. Wormsley said he has known Hands since 1997.

After the deal and before the lawsuit, Wormsley said Hands invited him to a pheasant shoot and a clay pigeon shoot. The two men attended dinner and the opera together in London with their wives, he said.

Wormsley yesterday expanded on his testimony that Hands lied, on the Friday before the auction, when he told the EMI negotiating team that Wormsley had told him the EMI board would accept a bid of 2.40 pounds a share.

Upon learning what Hands had said, Wormsley testified, he demanded that Hands send an e-mail “clarifying what the situation really was, so that my position with EMI was not compromised.”

That afternoon, Terra Firma’s then-general counsel, Tim Pryce, sent an e-mail saying “there might have been a misunderstanding” during the call between Hands and the EMI team that morning.

Wormsley followed with his own e-mail.

‘Happy to Replay’

“For those who would like something a bit clearer, I am happy to replay a voicemail on my mobile from Guy Hands, which I intend to keep for posterity,” Wormsley wrote.

Jurors didn’t hear the voice-mail, which Wormsley said was an apology from Hands. Sometime later, the voice-mail was automatically erased, Wormsley testified.

Wormsley completed his testimony yesterday after spending two days on the stand.

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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