In no real surprise, struggling record label EMI’s owners – venture capitalists Terra Firma – have lost their court case against bankers CitiGroup. Terra Firma had sued CitiGroup saying that they’d lied to them when they forked out a massive $6.5 billion for the company in 2007, telling them that there were other bidders for the company when in fact there were none. A New York Federal Court jury took just 4 ½ hours to decide that greedy Guy Hands’ Terra Firma didn’t have a case and dismissed the suit.
“It was just showing emails, telephone calls. To me it wasn’t enough,” said Dennis Posillico, a 61-year-old retired postal worker who sat on the jury. “I was leaning toward Hands but then I went with Citibank. The closing statement turned me.” Terra Firma released a statement saying that EMI would “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.” Terra Firma the lawsuit was “an important action to bring and that we had a responsibility to our investors to bring it.”
What does this mean for EMI? It means things are looking pretty grim. Terra Firma’s last ditch effort to recoup their losses in paying about twice what EMI was worth means that they are in the shit, and it’s all down to a waiting game. If Terra Firma can’t refinance their debt to CitiGroup, the bank will probably take over EMI and sell off the profitable parts of it such as publishing and kill off the recorded music division which is bleeding cash like a stuck pig.
