Terra Firma Capital Partners Ltd chairman and chief executive Guy Hands proposed three months ago to break up music company EMI Group Ltd, court documents filed in New York show.

Hands made the proposal in a letter to Chad Leat, head of the alternative asset group at Citigroup Inc, Terra Firma's lender for the EMI deal, according to the declaration by a Citigroup loan advisor filed with the U.S. District Court in New York.

In the letter, included as an exhibit to the declaration, Hands said Terra Firma wanted to pursue a "consensual restructuring" of EMI's music publishing and recorded-music divisions, referred to in the the letter by their initials.

"The implementation of the separation of RM and MP is essential," Hands wrote in the letter filed with the court.

Citigroup rejected Hands' offer, according to the Wall Street Journal.

Citi and Terra Firma did not immediately return calls seeking comment.

Earlier this month, Terra Firma asked New York courts to hear the case over its troubled deal for EMI, rather than shift the proceedings to London, a move it said could jeopardize the tax status of Terra Firma founder Guy Hands.

The private equity firm has become embroiled in an increasingly bitter legal dispute with U.S. bank Citigroup, which advised on and provided the financing for Terra Firma's £4 billion ($6.3 billion) acquisition of EMI in 2007, a deal done at the height of the buyout boom.

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