PE Firm Terra Firma is suing Citigroup (C) for facilitating its acquisition of music label EMI during the PE boom years.
Of course, that acquisition turned out to be a disaster — like so many deals done in the age of cheap money.
In otherwords, Terra Firma is basically accusing Citi of being a predatory lender.
NYT: In its complaint, filed in New York State Supreme Court, Terra Firma says that it was essentially tricked into paying £4 billion, or $6.5 billion, for EMI in May 2007, near the height of the private equity boom. The private equity firm and its chairman, Guy Hands, have since been criticised for paying too high a price for the music publisher only months before the credit markets began to implode.
Citigroup has also been criticised for lending billions of pounds to the deal — a loan it was unable to resell as planned when the debt markets faltered.
Terra Firma and Citigroup have since been locked in a struggle over control of EMI. Many analysts have speculated that the most likely outcome for EMI, which has lost prominent artists like Radiohead, is a fire sale to a rival like the Warner Music Group, perhaps as part of a bankruptcy proceeding.
Here’s the complaint via DealBook:
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