Friday, November 5, 2010

Hands v. Citi – It’s a gas!

by Emmanuel Legrand

“We’re all in it for the money” and obviously some are more in it than others. But the irony in Frank Zappa’s lyrics was certainly lost on Terra (not so) Firma boss Guy Hands when a New York jury decided that he was not duped by Citi when buying EMI, and that he made a conscious decision as an investor.

Guy Hands
Hands v. Citi was above all a case about who, in a pond where gangs of piranhas were circling around hordes of crocodiles, was the baddest. Hands is some kind of 2.0 version of Gordon Gekko. His whole life is about making money, more money (or else why would have he been dodging taxes by living in Guernsey, at the expense of only seeing his parents and family on rare occasions).

And here you have a jury of nobodies, not chosen among the masters of the universe, who tell the world that, after all, he is not so good at his business. That he should have thought about it twice before spending billions on EMI. That he knew what he was doing or else his due diligence process was faulty. That he should have been more careful when choosing a bank that was adviser as well as lender.

So Hands’ reputation is in the gutter. Citi’s does not come across as too pure either. And EMI is in deep shit. The best thing that could have happened to Hands was a verdict going his way. He would have had his exit strategy. Now, EMI’s future will be in the hands of Citi if Hands cannot meet its financial obligations. And that might not necessarily be a bad thing. As an owner and operator, Hands has not really done such good job there too (see previous posting).

Maybe it would be time for Hands (who also bears the title of 'chief investment officer' at Terra Firma) to consider retiring. But will he? As one EMI artist eloquently put it, “Money – It’s a gas!” It sure is…

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