Focus on EMI trial

 
Marion Dakers
JUDGE JED RAKOFF
Jed Rakoff provoked the ire of Wall Street when he rejected Bank of America’s $33m attempt to settle a dishonesty probe last year, describing such offers as “half-baked justice at best”.

He redeemed himself in the eyes of one American bank yesterday, though his merciless courtroom treatment of long-winded witnesses gained him few friends. He was happy to slash Hands’ damages claim by $6bn, and once cut off irrelevant arguments about Hands’ and Wormsleys’ children by snapping: “I congratulate them on their fertility.”

GUY HANDS
THERE were numerous raised eyebrows in both music and private equity camps when Guy Hands bought EMI in 2007. As a private equity tycoon with huge stakes in the Meridien hotel chain and Shanks waste plants, Hands never seemed the right fit for the home of Kylie Minogue and Pink Floyd.

Nevertheless, he has poured millions of pounds from his own funds into keeping afloat the record label he hunted for close to 15 years. He said in court last month that between 60 and 70 per cent of his personal fortune is tied up in the firm.

Hands graduated from Oxford with a third class degree in politics and economics, and started his career as a bond trader at Goldman Sachs.

He also spent time at Nomura before setting up his private equity vehicle Terra Firma in 2002.

He is now based in Guernsey, having moved from Kent last year for tax reasons. He claims to almost never visit his wife and two school-age children to retain his exile status.

DAVID WORMSLEY
DAVID Wormsley, known as The Worm in financial circles, was once Guy Hands’ financial adviser and used to take shooting holidays with him and his family. Citigroup’s UK chair of investment banking is unlikely to get another invitation.

Wormsley, 50, had until recently managed to steer clear of the public eye, despite being named the top mergers and acquisitions banker in the City several years running. He has been linked with gigantic deals including Ferrovial’s £10bn purchase of BAA and a £41bn restructuring at Shell.

His most recent distractions from the US fraud case included advising CVC Capital in its £850m joint takeover bid for Brit Insurance, the sponsor of the England cricket team, earlier this year.

In an email to Hands in 2006 he told his old friend: “I am incapable of not trying to get you to the best possible outcome.”

Despite the sour outcome of the EMI deal, the US courts agree with him.

TIME LINE | TERRA FIRMA AND EMI

18 - 21 May 2007
Guy Hands claimed David Wormsley made three phone calls to Guy Hands encouraging Terra Firma to bid 265p a share for EMI by 9am the next day to close the deal.

21 May 2007
Terra Firma borrows £2.6bn from Citigroup to buy out EMI for £4.2bn.

October 2008
EMI posts a full-year loss of £757m.

September 2009
Terra Firma writes down the investment by 50 per cent and its entire portfolio by 45.5 per cent.

11 December 2009
Hands files lawsuit at the New York Supreme Court accusing Citi of tricking Terra Firma into buying EMI.

August 2010
EMI achieves 2010 revenues of £1.65bn and a net loss of £512m.

October - November 2010
Fraud case opens in Manhattan, eventually dismissing Hands’ claims that Wormsley lied to push him into bidding.