DURING his testimony in a New York court on October 19th, Guy Hands, the boss of Terra Firma, a European private-equity firm, compared suing Citigroup to “putting a stick into a dragon”. Mr Hands claimed that Citigroup had tricked his firm into buying EMI, a music label, in 2007 for £4 billion ($6.3 billion) by claiming there was another potential buyer. Mr Hands might fancy Citigroup the fiery villain, but a New York jury didn’t see it that way. On November 4th it decided that Citigroup was in the clear, leaving an embarrassed Terra Firma to figure out how to revive its ailing investment.
EMI is worth around £1.8 billion, far less than its debt. Terra Firma was hoping to prevail in court and make Citigroup pay it billions of dollars in damages, which could help it revive EMI. Now Terra Firma will have to look to its investors to raise more money, many of whom may not look favourably on the request, given that they paid too much for the company in the first place. If Terra Firma does not invest more equity in EMI, it will have to frantically look for a buyer, or hand it over to Citigroup, which financed the deal.