Terra Firma has filed a slightly batshit lawsuit against Citigroup, in which the poor sheeplike Guy Hands claims he only bid for EMI because Citi’s David Wormsley told him he ought to.
There’s another part of the lawsuit, though, which hasn’t got quite as much attention: Hands claims that Citi put out a research report in September the publication of which had all manner of nefarious undertones:
While nominally labelled an analyst report regarding the publicly traded stock of Warner, the core of the Citi Report was a broadside attack on Terra Firma, its investment in EMI, and its reputation. Citi launched the attack in order to create marketplace uncertainty about EMI’s ability to operate as a going concern, thereby damaging EMI’s current and prospective business relationships and profitability, and undermining Terra Firma’s ability tomanage EMI successfully.
In other words, Citi’s objective in publishing the Citi Report was to undermine EMI’s performance, causing the business to fail the quarterly covenant test and thereby allow Citi to wrest control of EMI from Terra Firma.
Wow, a research report can do all that?