Terra Firma chairman Guy Hands has instigated legal proceedings against Citigroup over the way it acquired EMI, according to reports.
U.K. newspaper The Guardian claims Hands has applied to the high court requesting information about the conditions under which Citigroup was allowed to take full control of EMI earlier this year.
As previously reported, Citigroup took control of the British music major in February, ending Hands' troubled reign at EMI. Hands had originally acquired EMI in 2007 via a £4 billion buyout funded through private equity firm Terra Firma, financed with debt from U.S. bank Citigroup
Following Citigroup's acquisition of EMI, which saw PricewaterhouseCoopers act as administrators to Maltby Investments Limited, the holding vehicle through which Terra Firma owned EMI, the Wall Street bank immediately affected a debt-for-equity swap to recapitalize the company, which counts Coldplay and Katy Perry among its roster. It is unclear what, if any, impact the new legal proceedings will have on Citi's planned sale of EMI, which is currently subject to multiple bidders.
EMI did not respond to requests for comment while representatives of Citigroup and Terra Firma could not be reached at press time.
The Guardian, nevertheless, reports that a procedural hearing took place earlier this week, which saw Terra Firma's lawyers make an application for information from PricewaterhouseCoopers about how Citigroup was able to seize control of EMI. That claim is backed up by Sky News, who cites a source "familiar with the private equity group's grievance."
"Terra Firma had been meeting its [financial] responsibilities] to EMI and never missed an interest payment," Sky News quote the anonymous source as saying. "Citi has declined to provide evidence proving the basis for its decision to take control of the company, and so legal action has been unavoidable."