David Wormsley, an executive at Citigroup (NYSE: C) had a bought of forgetfulness today. While Wormsley was on the witness stand today, he seemed to have a difficult time trying to recall his role in the acquisition of music company EMI by a British private equity firm.
“I’m afraid I don’t recall” was a phrase Wormsley uttered many times today. Terra Firma Capital Partners claim that Wormsley and Citigroup tricked them into bidding too much for EMI on the false belief that there were other bidders. Wormsley went as far to say that he could not recall for sure that he told Terra Firma founder Guy Hands not to play games on price just before the May 2007 auction. Terra Firma lawyer David Boies displayed an e-mail in which Wormsley told an EMI executive he had done so.
Wormsley’s memory did miraculously come to life when he recalled his anger at Terra management for suggesting that a lower bid than the one Terra Firma eventually made might be sufficient to win approval from EMI’s board. “I was furious on this,” he testified. He said he demanded that Hands send written confirmation to EMI saying he had never made that representation. Wormsley testified that the first time he knew for sure that Terra Firma was the only bidder for EMI was after the lawsuit was filed. He said that EMI told him not to negotiate with bidders, and that he obeyed the command.
Although Terra Firma paid $4.9 billion for EMI, they now estimate the deal to be worth 25 percent less now. Feeling deceived, the firm sued Citigroup Inc. last year, seeking a return of any money Citigroup was paid for the deal among other unspecified damages, including lawyer fees. The civil trial is expected to end next week, with closing arguments coming shortly.
