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After seven years Terra Firma drops $2 billion case against Citi

Staff writer |
Guy Hands has withdrawn his case against Citigroup over the 2007 buyout of music label EMI, his private equity firm Terra Firma said, ending almost seven years of on-off litigation.

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Hands, the founder of Terra Firma, had been seeking damages of 1.5 billion pounds ($2.2 billion), alleging that the U.S. bank misled him over the EMI deal.

"Terra Firma confirms it unreservedly withdraws its allegations of fraud," a lawyer for the firm told a London court, adding that it would also pay Citi's legal costs.

At the time of the acquisition, Citigroup advised the then publicly listed EMI as well as providing financing to Terra Firma.

Terra Firma's case had focused on a series of alleged "oral misrepresentations" by senior Citi bankers David Wormsley, Chad Leat and Michael Klein, which it claimed led to the firm overpaying for EMI. All three men were set to be called as witnesses at the trial.

Terra Firma bought EMI for 2.4 billion pounds in 2007, at the height of the credit bubble. But when EMI's performance slumped and the financial crisis hit, the buyout house lost its entire investment and had its reputation severely dented.

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