LONDON (Reuters) – Buyout house Terra Firma asked New York courts to hear the case over its troubled deal for music company EMI, rather than shift the proceedings to London, a move it said could jeopardise the tax status of Terra Firma founder Guy Hands.
The private equity firm has become embroiled in an increasingly bitter legal dispute with U.S. bank Citigroup (C.N) which advised on and provided the financing for Terra Firma’s [TERA.UL] 4 billion pound ($6.3 billion) acquisition of EMI in 2007.
Terra Firma’s lawyers Boies, Schiller and Flexner filed documents with a New York district court on Friday, arguing a hearing in London could jeopardise Hands’s status as a Guernsey resident and that the principal people involved in the deal were based in New York.
It lodged a claim with a New York court last year accusing Citigroup of inflating the price of the business by not revealing that the only other remaining bidder, Cerberus Capital Management, had withdrawn from the auction.
Terra Firma’s woes over the EMI deal, done at the height of the buyout boom, were compounded on Thursday when the company announced a full-year 1.56 billion pound net loss. [ID:nLDE6132NY]
In his own declaration to the court, Hands said he was no longer a British resident, having left the country for tax reasons last year.
Hands said he had not set foot in Britain since last April and has no intention of doing so until he has been out of the country for at least three years. “My residence in Guernsey is real, not a sham or a mere moniker for an otherwise unvisited location,” said Hands. “I have moved my personal effects and belongings there from my former home in Kent to my home there. When I am not travelling, I live in Guernsey,” he said. He added he has spent 140 days in Guernsey and 170 days travelling on business or for personal reasons since April.
Citigroup has said the case should be moved to London as the main parties were based in Britain.
Terra Firma’s documents also named former Citigroup CEO Charles Prince and Michael Klein, Citi’s then global head of investment banking, as important witnesses in the case. It previously named David Wormsley, a senior executive at the UK investment banking arm, as a key player in its claim for fraud.
It provided a personal email from Klein to Hands, which read: “I am personally involved.”
Citigroup has until Feb. 11 to respond, with a court hearing on the location of the case planned for Feb. 19, people familiar with the situation said.
A trial date of Oct. 18 has been set. (Editing by Sharon Lindores) ($1 = 0.6363 pound)
By Simon Meads