COURT TURNS DOWN CITIGROUP
ON TWO COUNTS IN EMI SUIT

U.S. District Court Judge Jed Rakoff rejected the bank’s request to dismiss the case in an order today. In addition, he says the case should be heard in N.Y., not the U.K., which is what Terra Firma wants.

"For reasons that will be elaborated in a forthcoming written opinion, Citi's motion is denied in its entirety," Rakoff wrote.

Terra Firma claimed Citigroup misrepresented that another private-equity firm, Cerberus Capital Management LP, was still bidding on the record company, according to the complaint.

Terra Firma wants to recover "lost equity of billions of dollars" and obtain punitive damages from
Citigroup, which stood to garner substantial fees as investment adviser and lender to EMI as well as sole financier to the private-equity firm.

Terra Firma’s loan covenant, due at the end of this month, requires it to pay $190 million to the bank, which would take over the property if Hands and company default.

Chatter is that Warner Music Group and BMG Rights Management, a consortium formed by Bertelsmann with private equity firm KKR, are interested in the record and music publishing company, respectively, though all involved have publicly denied it.

EMI had argued that the case should be heard in N.Y., since Guy Hands officially moved to the tax haven of Guernsey last year, which means he’s limited in the amount of time he can spend in the U.K.

Citigroup's lawyers at Paul, Weiss, Rifkind, Wharton & Garrison had argued that the matter should be heard in a British courtroom because the events in the lawsuit took place in that country and the players involved live there.

Citigroup also accused Terra Firma of forum-shopping, claiming because it’s a foreign entity with no connection to the Southern District of New York, its desire to have its case heard in the U.S. should bear little weight.

Jonathan Sherman, a lawyer for Terra Firma, told the N.Y. Times: "We are very satisfied with the judge's ruling and now look forward to having our day in court."

A spokeswoman for Citigroup, Danielle Romero-Apsilos, responded: "We are disappointed with the Court's procedural ruling. We look forward to defending ourselves in this case, which we believe is entirely without merit."