Guy Hands, the British private equity financier, took to the witness box yesterday on the second day of his bid to prove he was tricked into paying too much for the music company EMI.
The second day of the trial brought his publicity-shy former friend, David Wormsley, the head of Citigroup's UK investment arm, out into the open for the first time since Mr Hands alleged that Mr Wormsley deceived him into paying too much for the label – which counts Robbie Williams and Coldplay among its biggest acts.
Mr Hands told the New York court that he paid £4.2bn in an auction for the 113-year-old music giant at the height of the credit bubble after he was told that another buyer was planning to bid. Mr Hands, 51, claimed that Mr Wormsley had told him in May 2007 that another private equity firm, Cerberus, still wanted to buy EMI – a call, he said, which was "incredibly important" in the decision of his firm, Terra Firma, to buy the label.
Terra Firma's case centres on three alleged telephone calls between the two men over the weekend of 19 and 20 May 2007, as the 21 May deadline to buy EMI loomed.
It eventually paid 265p per share for EMI in the belief Cerberus would offer 262 pence per share, but the rival bid did not exist, the nine-member jury heard.
"He told me that Cerberus was there at 262 and that it was very important we had to get in," claimed Mr Hands of Mr Wormsley, his former drinking partner. "He told me not to play any games with the price."
Asked by his lawyer, David Boies. about his relationship with the banker, Mr Hands said: "On a personal level there was someone who was a friend and with whom we had worked with successfully over very many years."
Citigroup, which financed the buy-out with loans totalling £2.6bn, denies Terra Firma's allegations that Mr Wormsley or the bank lied to or tricked Mr Hands.
The bank argues that Terra Firma sued only after realising the deal had gone badly. On the first day of the trial, Theodore V Wells, Citigroup's chief lawyer, told jurors: "Mr Hands thought he had the golden touch, and he did for quite a while – until he bought EMI."
Yesterday, another lawyer representing Citigroup questioned Tim Pryce, a senior executive at Terra Firma, about a lack of documentary reference to the May 2007 phone calls. Asked whether any document in the "millions" of pages produced for the trial mentioned the alleged calls between Mr Hands and Mr Wormsley, Mr Pryce confirmed that none did.
Mr Wormsley is expected to give evidence later in the trial, which is one of the highest-profile legal showdowns since the financial crisis, and could take up to three weeks.
Terra Firma is seeking in the region of £7bn in damages.