Terra Firma vs Citi: Look, no Hands
Court documents in the recent Terra Firma case against Citi have revealed that the relationship between the two parties was hardly harmonious long before the disputed telephone calls between David Wormsley and Guy Hands involving Cerberus Capital Management’s appetite or lack thereof for a bid for EMI.
Evidence given in February by Citi’s Paul Simpkin outlines the chain of events that led to Citi’s offer to finance Terra Firma’s buyout of the firm in 2007. Simpkin reveals that Hands played no direct role in the negotiations until May 20 when the final terms of the financing were agreed. Describing the Citi team as "a litany of lower-level London personnel", Hands did not speak personally to Simpkin, who was in charge of negotiating the package, at all. However, the email chain reveals an ill-tempered interjection from Hands during the process following an email from Kamel Tabet, previously Citi’s London-based global head of financial entrepreneurs. Simpkin reveals that Tabet – who had client responsibility for Terra Firma – "did not play an active role in the financial negotiations" but says that "I understood that he was going to call Mr Hands". The documents show that Tabet in fact sent Hands an email opining that any outstanding issues were relatively insignificant and both positions were very close. He then joked: "It is in your hands (no pun intended)."
This prompted a furious reply from Hands just eight minutes later stating: "We have gone round in circles on the same economic points for two days and I have tied up our lawyers working with you. At this point I have instructed our lawyers to work with alternative providers." In his deposition Simpkin stated that "something happened" at this stage and he "subsequently learned that Terra Firma wanted to reopen negotiations".
Did notoriously volcanic Hands have a sense-of-humour failure about his name? Who knows? But any future lenders to the buyout firm would be well advised to dodge the jokes and stick to the script. Tabet, considered one of the most talented and highly regarded private equity bankers in Europe, took a sabbatical from Citi for an unspecified period in May 2008.