Terra Firma withdraws EMI suit, pays Citi's legal costs

In a statement, Citi said the GP would cover all legal costs for the case, which is now closed just two days after the High Court started hearing evidence.

Hands' full statement on the matter reads: "These claims were brought in good faith. However, it has become evident that our documentation of these fast-moving and complex events, and memories of these events after nine years, are no longer sufficient to meet the high demands of proof required for a fraud claim in court.

"The matter is now closed. Terra Firma is looking to the future. We have an exciting portfolio of companies, a talented and experienced team, supportive and loyal investors, and €1bn of capital to invest."

In response to the withdrawal, Citi released the following statement: "We have always maintained that the allegations made by Terra Firma were entirely baseless and that Citi, specifically David Wormsley, Michael Klein and Chad Leat, acted at all times with absolute honesty and professional integrity throughout the EMI transaction. We are very pleased that Terra Firma has unreservedly withdrawn the allegations, agreed to the dismissal of the proceedings and will pay Citi's costs in relation to this matter."

Terra Firma had brought the suit to a London High Court, where Hands yesterday was questioned by Citi's barrister, Mark Howard QC of Brick Court Chambers, in front of Sir Justice Michael Burton.

Thursday's questioning was the second day of the case. The defence's council said at the beginning of proceedings that morning he expected the case to last until the end of the following week.

Much of Howard's questioning focused on the assertion by Hands that Citi dealmaker David Wormsley had told Hands that private equity group Cerberus had lodged a competing bid for EMI, despite no such bid existing.

The QC told the court that Hands' description of Wormsley's actions had not been part of Hands' witness statements in the two prior suits his firm had brought against Citi, in New York and Manchester.

Hands told the court the allegation against Wormsley had not been part of previous suits because it had not been in his memory at the time, but had resurfaced as he was reviewing his diary and emails from the time of the deal.

During one line of questioning about when Hands first determined Wormsley as the source of the 265 pence share price bid Terra Firm lodged for EMI, Hands began "I always believed," correcting himself to "I always thought it came from Mr Wormsley". Howard responded that Hands had "given the game away" with his answer, inferring Hands had made up the accusation after the fact – an allegation Hands denied.

Terra Firma was seeking at least £1.5bn in damages before the suit was withdrawn.

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