Citi counter-punched Terra Firma's claim that Citi banker David Wormsley is a liar Tuesday, as Wormsley accused Guy Hands of recklessly and falsely using his name to try and test a low bid price for struggling music publisher EMI.
Citi alleges Hands lied to EMI's advisor Greenhill in 2007, claiming that Wormsley told him the EMI board would be “favourably disposed” to a binding bid of £2.40 per share for the company. Wormsley strenuously objected to Hands' alleged misrepresentation, and demanded, and received, a written retraction from Terra Firma.
Tim Pryce, Terra Firma's general counsel at the time, sent an email to Borrows and Wormsley on 18 May 2007 stating there may have been a “misunderstanding” during Hands' discussion with Greenhill's co-chief executive Simon Borrows “which we would like to clarify”, according to a copy of the email.
When [Hands] uses the phrase 'misunderstanding during the call with Simon Borrows', what he's saying is that there was a misunderstanding because he shouldn't have said that I had told him that 240 pence was acceptable.
During testimony Tuesday, Wormsley several times alluded to the incident and said Hands had “lied”.
Terra Firma attorney David Boies and Wormsley had a tense exchange over the email “clarification”, with Wormsley claiming the letter's admission of a “misunderstanding” was code for an admission of lying and an apology.
“I think that's a careful use of language,” Wormsley said. “When [Hands] uses the phrase 'misunderstanding during the call with Simon Borrows', what he's saying is that there was a misunderstanding because he should't have said that I had told him that 240 pence was acceptable.” Wormsley also said Hands called him and left a voice mail that, combined with the Pryce email, made it clear that Hands had lied. He said the voice mail was accidentally deleted.
Terra Firma's trial against Citi is in its second week. The firm claims it overpaid for EMI because Wormsley lied to Hands during a series of conversations in May 2007 that Cerberus Capital Management was still bidding for EMI, when the firm had already dropped out of the bidding.
The firm has no physical proof that Wormsley in fact liked to Hands, meaning the case rests on Boies' ability to convince the nine-member jury that Wormsley is a liar.
But Tuesday, Boies spent a lot of time parsing through emails and trying to interpret frequently cryptic sentences. He questioned Wormsley on EMI's failed sales process in 2006, when Permira was interested in the company.
He tried to paint a picture of a company in bad distress in early 2007 and Citi desperate to stay on as financial advisor for another attempt at a sale. Citi was eventually replaced by Greenhill as EMI's advisor.
Boies had a long exchange with Wormsley about whether Citi was actually an advisor to Terra Firma in the EMI transaction, which Wormsley continually denied. Citi's only official capacity in the sales process was on the financing side, in which role it procured £2.5 billion in debt for the deal, he testified. Hands has claimed he was in regular contact with Wormsley about the EMI deal talking about what kind of bid to offer EMI's board, discussions that would usually fall to a company's advisor.
Wormsley answered questions in a slow, methodical manner and frequently asked Boies to repeat questions or show him the documents he referenced, which dragged on questioning throughout the day.
At times, Wormsley seemed to grow annoyed at a line of questioning, and the judge presiding over the case, Jed Rakoff, several times took over questioning for Boies to try and get clear answers from Wormsley.