It's been a while since we heard about Guy Hands, the man who borrowed large sums of cash to buy EMI and then discovered he wasn't very good at running a record label.

He's been in court this week, trying to blame his failures at EMI on CitiGroup, in a legal case which was basically Hands' Terra Firma going "waah waah, why didn't they tell us".

The fraud case was supposed to last into July - rather like Euro 2016 - but ended somewhat abruptly with a humiliating defeat - rather like England's Euro 2016.

Hands climbed down:

“Terra Firma confirms it unreservedly withdraws its allegations of fraud,” David Wolfson – standing in for lead QC Anthony Grabiner – told the hastily convened court. Terra Firma will also pay the costs of the US bank, likely to run into millions of pounds.

Hands, who had been claiming at least £1.5bn from Citi, had been questioned by the bank’s lawyer for the previous two days, and his evidence had been expected to last into next week. He had faced repeated questions about his recollection of events in 2007 when Terra Firma took over EMI just before the credit crunch and had been accused of having a “hazy memory”.

At one stage during his questioning of Hands, Mark Howard QC, representing Citi, said: “The problem is, Mr Hands, your story is shifting and it is impossible to reconcile these different versions.”

Much as EMI had relied on releasing poorly-conceived best of 'special edition' collections, Hands was trying to sell a bunch of remixes of old material, but the court wasn't really buying.

His case having crumbled underneath him, Hands was left trying to whistle a brave tune:

Hands, who was not in court, said the latest claim had been brought in good faith. “However, it has become evident that our documentation of the fast-moving and complex events, and memories of these events after nine years, are no longer sufficient to meet the high demands of proof required for a fraud claim in court,” he said.

“The matter is now closed,” said Hands, saying that the Terra Firma business he founded in 2003 was looking to the future. “We have an exciting portfolio of companies, a talented and experienced team, supportive and loyal investors and €1bn of capital to invest,” he said.

It's funny, isn't it, that he hadn't noticed he couldn't remember all that "fast-moving" stuff until he'd been taken to pieces on the stand.

And while Hands might believe the matter is closed, that isn't entirely true. Terra Firma have agreed to pick up all of Citi's costs. That Billion of capital might be whittled down a bit in the coming weeks.

Given his strategy when in charge of EMI was throwing money away down pointless black holes, it's not surprising that Guy Hands is intending to doggedly fight on to regain the corpse of the label.

He's now chasing a bee that thinks that maybe all the outstanding debts that Citi were calling in had, in fact, been properly serviced:

Hands believes that all payments on debt had been maintained up until Citi took control in February, although EMI was expected to break a test of its banking covenants at the end of the first quarter.

That seems like the sort of detail that Hands should (a) be certain about and (b) have been certain about back during the first test. If you're relying on EMI to flog your records or pay your royalties, you're going to have to hope that Hands just pisses his cash away on lawyers.

Thanks to Jim W for this email:

Wandering around the Ox Union and spotted this lovely snap of a future Foreign Sec with his mate, the thoroughly lovely Guy Hands, behind him.

For some reason both are next to the scraggly historian EP Thompson.

Condition of the English Record Label, etc.

And here's the photo...
What a lovely vision.

It's lovely of Guy Hands to give No Rock And Roll Fun a tenth birthday present, with a move that demonstrates everything the music industry has been doing for the past ten years: blaming someone else for its woes, blindly pursuing legal action that has failed before; tossing good money after bad; alienating the very people it needs the support of; having trouble with the twenty-first century and just generally showing an incapacity to move on. In fact, the story was only a Gennaro Castaldo short of a full house.

Terra Firma have filed an appeal against their defeat in the the lawsuit against their own bankers.

Now, it might be that there's grounds for appeal - although, to be frank, it sounds like Terra Firma have produced a list of quibbles rather than any major flaw in either judgement or process - but the appeal process could drag on for months and months. And every quarter, EMI is finding it harder to meet its financial obligations.

Doggedly fighting on might seem like a heroic action, but Guy Hands is standing in a burning boat arguing about who started the fire instead of calling the fire brigade. This is an act of vanity.

The Citigroup v EMI trial wasn't a total disaster for Guy Hands. Sure, the jury took hardly any time at all to kick Hands' claims out of court, and it now looks inevitable that Citigroup will take control of EMI, and Hands' reputation lays in tatters.

But at least he managed to be humiliated in New York, so it won't affect his tax status. So that's a plus, right?

The case was never going to fly, and given that Citi could point to Guy Hands' close friendship with David Wormsley remained close even when Hands had twigged the banker had diddled him it was probably foolish to even start the action.

And that was before Guy Hands stood up in court and said actually, he didn't even recall much about being defrauded, now you ask:

Terra Firma Capital Partners Ltd founder Hands, pressing an $8 billion damages claim against Citigroup, also testified at trial in New York that he had no document to support his allegations banker David Wormsley lied to him in three phone calls about a rival bid.

During hours of tense cross-examination, Citigroup trial lawyer Ted Wells asked Hands: "The only thing you can remember is the conversation with David Wormsley and chocolate biscuits?" from a May 20, 2007 Terra Firma board meeting.

Hands replied: "That is correct, in detail."

He said he could remember "how close the plane was" at the meeting in an airport hangar on the English Channel island of Guernsey, but not the meeting details or documents.

He said he remembers being hungry and asking for chocolate biscuits to eat.

How on earth did Hands think this was going to come off well for him? Was he hoping that he could enter an empty Tunnocks Teacake Wrapper into the court to support his entire case?

Hands has done the remarkable in the current climate and made the world feel a bit sorry for a bank. Indeed, there was a juror who got special thanks from Michael Moore for constructing an anti-bank movie, and even then Hands couldn't find any support.

It perhaps says it all that the lead Terra Firma counsel didn't stick around for the verdict. He'd already moved on to the next thing.

Of course, it's not inevitable that Terra Firma will lose EMI. But given that it's struggling to keep afloat, and relying heavily on the kindness of its main creditor, dragging that creditor to court and calling it fraudulent might not have been the shrewdest move.

It's horrible for EMI, and the people who work for EMI. You know what's funny, though? Even after a half-decade of terrible decisions, it's unlikely Hands is going to suffer as much as those whose employment depended upon him.

Today's the day when Terra Firma will ask its investors to pour more cash into the mismanaged black hole of EMI in order to persuade Citi to let them keep going.

Citi will decide on Friday if they're going to call in the loans; Guy Hands and his team believe that investors have, in principle, agreed to let him spend more of their money while hoping that Robbie Williams might do something to save them all. This week, it's about getting written confirmation of that.

Meanwhile, Sony are rumoured to be tying a bib round their neck and getting ready to feast upon EMI's carcass:

Head of Sony Music Rolf Schmidt-Holz said: “We are in a position that allows us to seize every opportunity in the market – including EMI.”

Not good news for Hands, as Citigroup have already indicated they might reject Terra Firma's plans if they don't feel they're in the best interests of EMI. And a cash-rich alternative owner might tip the balance.

EMI's suicide-to-save-self plan to give its American records business away to a rival, in return for enough cash to stop the bank taking it over isn't going well. Variety reports that Universal didn't offer the sort of cash EMI needs, and a sniff from Sony failed to turn into any formal talks.

Which is probably just as well, saving them the horror of this conversation:

Guy Hands: Here, Mr Bank Manager, here's the latest part of the loan payback
Bank manager: Thank you. How did you fund this?
Guy Hands: Well, I sold off the rights to the entire US catalogue business for five years
Bank manager: Right. Um... you know that business was part of the figures we used when we decided if we'd let you have a loan to buy EMI, don't you?
Guy Hands: Uh... I guess?
Bank manager: And the income from the US catalogue business was part of how we expected you to be able to pay back the loan?
Guy Hands: I... um, I suppose...
Bank manager: And now you don't have that income.
Guy Hands: Oh! But... um...
Bank manager: So it's unlikely you'll be able to pay the loan back next time.
Guy Hands: Well... uh, now you put it like that...
Bank manager: I think you're a bad risk. I'll get Mrs Lewinsky from credit to start calling in the balance on your loan. Good day, Mr. Hand.
Guy Hands: But... I got a kidney! I could sell a kidney...

Hey! Hey! You guys - let's stop worrying about Citigroup taking EMI over because we screwed up when we borrowed the money to buy the company. Let's just have some fun. I'll switch the lights off, we can all move about, and then I'll switch the lights on again and we can see who is going to be in charge for the next few weeks. Fun, huh? Alright... off go the lights...

... and on they come again.

Elio Leoni-Sceti has been dumped as CEO; Charles Allen out of the Twilight Of ITV moves from being a non-executive chair to executive chair.

There's an official statement:

Charles has been non-executive Chairman of EMI Music since January 2009, chairing its Board and supporting the transformation of the business. Elio Leoni-Sceti, EMI Music’s Chief Executive, who has successfully led EMI Music through the first phase of its operational turnaround, will be leaving the company on March 31st 2010.

Yes, Elio's been a rip-roaring success. So, erm, naturally, we're getting rid of him. It's what you do when someone's been successful in phase one - dump him and bring in someone EQUALLY SUCCESSFUL to look after phase two. And the guy who helped ITV Digital be all successful by losing £1.4billion, he's the guy for the job, right?

Charles said: “Elio has done a great job. I have thoroughly enjoyed working with him; he is a very talented executive and we all wish him well in the future. Our goals for EMI Music remain the same. I will support and guide the group’s strong team, keep EMI’s focus on creativity and superb A&R, and deliver a digital platform. This is a great business – our task is to ensure it has a great future."

EMI has a focus on superb A&R? Or is Allen still being as satirical as when he claimed that Elio had done a great job?

Elio added: “EMI is a wonderful business with a great team and new creative and operational momentum. My job here is now done and it is time for me to move on. It has been a pleasure to work with Charles and so many other talented and committed people. I look forward to seeing the company go on to further success in the future.”

... the sort of successes that I have brought them. In other words, I hope they ALL have to cram their belongings into a filing box and shuffle out to the car park while someone - probably the drummer from Starsailor - unscrews the nameplate on their office doors.

Elio's departure may or may not be related to documents just filed in a US court which told a completely different tale. Business Week reports:

In a letter to Hands, part of court documents filed Feb. 4 in New York, Leoni-Sceti had written that morale at the company had reached a low and that artists were questioning whether to stay.

EMI is in talks with artists, “all of whom are questioning to some degree whether it is wise to continue a relationship with EMI,” Leoni-Sceti wrote in the Oct. 2 letter, saying their concerns were sparked by a Citigroup report on EMI’s prospects. Hands had named Leoni-Sceti to the top job in July 2008 with no music industry experience.

But - hey - it's all success, success, success if you ignore that.

Just to underline how successful EMI is with all these talented people running it, Business Week adds that OK GO have dumped the label and Queen and Pink Floyd are thinking of taking their back catalogue elsewhere.

As he struggles to try and stop Citi taking EMI from Terra Firma, a document emerges showing that Guy Hands proposed breaking up EMI late last year.

His vision? Split off the bit that makes money (publishing) from the bit that sucks out the cash (records).

Though Citigroup rejected the proposal, Mr. Hands wrote that "we believe that we are in agreement in relation to a number of the key components of an acceptable solution including the need to separate the two businesses."

Mr. Hands's proposal focused on fixing the financial structure of the two divisions, and didn't discuss operational strategies.

"So one of your kidneys is totally broken, our plan is to rip out the good kidney and give that to someone else. That way, at least your good kidney has a chance."

Still, all this interest in the future of the business must make interested parties delighted? Citi and Terra Firma suggesting strategies? Two heads are better than one, right?

Eh, Wall Street Journal?

A filling last week from Terra Firma shows the harm the tug-of-war over the business and the bad publicity surrounding the deal is causing. In an email to Mr. Hands in early October, EMI Music CEO Elio Leoni-Sceti wrote that in the first nine months of 2009, counterparties' concerns about EMI's stability caused the company to lose distribution deals that would have gen rated income of $13 million a year. "Not only are artists and artists' managers raising concerns but morale within the company has reached a low point," he wrote.

The guys at the Brits tonight in a sealed plastic tent? That'll be the EMI table.

Having screwed up EMI, loaded it with debt and sent it churning towards oblivion, you're unlikely to see Guy Hands outside Abbey Road studios anytime soon.

It turns out he's so mean, to avoid paying tax he won't even go and see his family:

Guy Hands, who moved from Kent to Guernsey last April in protest at higher income and capital gains tax rates, says he has "never visited" his school age children since he left the country. They have remained with his wife at their former family home in Kent and they now have to travel to Guernsey to see him.

Neither has he visited his mother and father – and wouldn't unless there was a family crisis: "I do not visit my parents in the United Kingdom and would not do so except in an emergency."

You wonder what would constitute an emergency large enough to shake Hands into a trip to the UK? Because, clearly, family ties are so much less important than keeping as much money as you possibly can.

Hands, by the way, is boasting about how much of a selfish moneygrubber he is - he's using this example of his extreme selfishness as an argument to try and stop Citigroup being allowed to hold the Terra Firma court case in London:

In a personal statement lodged in New York's southern district court Hands says he faces a top tax rate of 64% on earnings from employment from April, plus 18% CGT. He says he has been an "outspoken" critic of UK tax levels and fears that the Revenue will be watching him closely to ensure he does nothing that could threaten his move to obtain non-resident tax status.

Hands hasn't actually been able to explain why a country that has given him so much should be denied tax revenue that everyone else has to pay, nor why his meanness should be a determining factor in where a court case is held.

How would it be if someone facing court tried to argue the hearing shouldn't be held in, say, Liverpool because he doesn't fancy stumping up for the train fare?

Still, on the bright side, Hands, if you do have to come to the UK to fight your case, you might be able to pop in and see your parents. If they'll open the door to you. Not that they wouldn't want to, but they might be trying to save the cost of wear and tear on the hinges.

Guy Hands has more or less admitted that buying EMI was a rotten plan:

Guy Hands, founder of private equity firm Terra Firma, on Thursday admitted that if the May 2007 auction for music group EMI had happened two weeks later, he would never have bought the company, by far his biggest investment.

It's a little hard to think why he might have spotted the strange smell coming from the building had he waited fourteen days, having missed what everyone else could see when he did do the deal.

Still, he's excited for this year:

Meanwhile, on the operating front, EMI is making progress, Mr Hands added, noting that he expects earnings to reach £200m next year while the re-release of The Beatles recordings has been a huge success.

Really? A huge success? If it had been, that EMI is relying on a forty-year old product would be enough of a worry. But you'd have to suggest that the Beatle churn resulted in 'not an embarrassment' rather than a huge success.

As if it wasn't hard enough trying to keep EMI afloat with nothing more than a promise to do something sometime from Chris Martin, things are looking grim for Guy Hands on a personal front now.

The New York Times is reporting that HMRC is taking a close look at his claims to be a Guernsey resident for tax purposes:

[H]is lawyers hope to make the case that not only are the funds of his company, Terra Firma Capital Partners, administered in Guernsey and all the main investment decisions taken here, but Mr. Hands also has publicly vowed not to set foot again in Britain for the immediate future. If so, that should establish beyond a doubt that he is a resident of Guernsey.

But others are not so sure. Tax experts point to the fact that his wife, who owns their stately home in the Kent countryside southeast of London, runs a hotel business that is based in Britain. Three of his four children still go to British schools and the majority of Terra Firma employees, about 60 in number, are based in its London office.

While the lawyers argue about if it's legal or not, the "is it moral" question is much more easily settled, don't you think?

The FT is reporting that investors in EMI have agreed to Guy Hands' injection of £300million into the group:

Mr Hands is understood to be working with Barclays, JPMorgan and Morgan Stanley on a plan to raise £200m-£280m from a high-yield bond issue that could repay some of the debt EMI owes to Citigroup.

Repaying debt with more debt. All very inventive.

Perhaps they should just stick to mucking about with financial instruments and forget the whole making records thing? They seem much better at the one than the other.

Ominous noises from EMI, with Guy Hands scrabbling to keep the company afloat. He's put in three hundred million of his own money, but wants Citibank to write off half a billion of company debt.

Citibank, you'll recall, is in trouble of its own, having had to be bailed out by the US taxpayer for $300 billion. So, effectively, Guy Hands wants the US taxpayer to fund Terra Firma's disastrous stewardship of EMI.

Does this mean that Hands believes in taxpayers sharing the burden when times are tough? Not quite - sure, he'd like some tax dollars to keep his company afloat. But when the hat was passed around UK taxpayers to keep the state going, Hands took a different approach, pissing off the live as a tax exile in Guernsey when the 50p top tax rate came in.

Despite, erm, apparently being so rich he can afford to throw another £300million in to the black hole of EMI. God forbid any of that cash should find its way into the NHS or schools.

It's being spun as a fantastic move for Guy Hands, but his move from CEO of Terra Firma, with day-to-day control of the company, to being group chairman and chief investment officer instead, is hardly a promotion. Especially with that massive write-down on investments. He's being replaced by Tim Pryce.

The press release makes it all sound exciting, though:

Guy Hands said:

"Having worked closely with Tim for nine years, I am delighted that he has agreed to take up this position. He will make an excellent CEO of Terra Firma. Tim has been an integral part of Terra Firma since its formation and has done an outstanding job in his previous roles at the firm. Terra Firma has grown significantly since its creation in 2002. Over this period, staff numbers have increased from approximately 60 to over 110 people, investor relationships have expanded from one UK party to over 200 relationships in 26 countries, and assets under management have grown from €2 billion to €11 billion while 80% of our portfolio businesses’ revenues are now from outside the UK. As Chief Executive, Tim will be responsible for Terra Firma’s day to day operations while I will concentrate on investments, investors and developing the business internationally."

That might read a little oddly, but Guy made his statement while on a sponsored 'how many times can you say Terra Firma' challenge.

Pryce, meanwhile, did his best to make it sound like he was slipping onto a well-run deck and not being handed a bucket of manure with no bottom or handle:

"I am delighted to take on this role. Guy has built one of the leading private equity groups in Europe in a very short space of time which now manages and invests money on behalf of institutions all over the world. I look forward to making sure that the organisation works optimally in supporting Terra Firma's global investment and fundraising activities and to continuing to work with Guy on developing the business."

... once Guy has finished emptying the bins and given a polish to my new name plaque, of course.

Terra Firma dropped off the accounts for the year earlier today. They don't make very encouraging reading for Guy Hands' stewardship of EMI, with the value of the company being written off by 50%:

Terra Firma has written off half the value of its €2.6 billion (£2.3 billion) investment in music group EMI. The private equity giant revealed in its 2008 annual report that EMI accounts for most of a €1.36 billion (£1.22 billion) non-cash impairment charge on Terra Firma’s 2008 balance sheet.

Not, of course, that the terrible, cash-burning mess is the fault of Terra Firma. Oh, good lord, no:

In his executive statement, CEO Guy Hands squarely criticises banking executives, regulators and politicians for investing too much faith in credit during the boom: they should have seen it was “merely a very large bubble waiting to burst”, he says.

Ah yes. Bankers, executives, regulators. Politicians. They should have seen it coming. Instead of expecting the man lauded by his admirers as "a genius [who is] seeing things that other people don't" and who just last year was chuckling about "completing EMI Music's transition to a global functional matrix organization" to have any inkling that over-borrowing to buy out companies was less gravy train, more a leaky sauce boat.

Terrible times for Guy Hands and the Terra Firma stewardship of EMI: Hands has had to buy out some of the investors who helped buy the label in the first place.

Still, he's not had to pay much to buy them out. I say "still", although that would imply it's a good thing. In fact, the investors were quite prepared to take a bath on their shares just to be rid of the valueless investment.

Bad Idea explains why it's, well, a bad idea:

taking on the responsibility will increase Terra Firma’s indebtedness once the calls for funding come in - the money will have to come from the fund managers themselves, a rare and strange thing to happen.

It comes as Hands is gearing up to pay Citigroup a £32m quarterly loan payment, and spewing out cliched metaphors concerning his rather worrying portfolio of deals made at the top of the market. He’s noted that “the darkest time is before the dawn”, that he’s “getting out of both sides of the bed” (?), and has compared his pricey investments to ‘83 and ‘87 Bordeaux wines, a comparison that could only be understood by the most ridiculously wealthy people on the planet - at least Hands knows his audience.

To be fair, I think we can all understand the wine metaphor - it costs an absolute bloody fortune, there's every chance the thing has ruined before you get to enjoy it, and once you have the first taste, your asset starts to free-fall in value to almost zero straight away.

[Thanks to Michael M]

The bumbling regime at the head of EMI owners Terra Firma have sacked two of the people who helped Guy Hands' attempts to control the record label. The FT reports that Chris Roling, appointed by Mr Hands as EMI’s chief operating officer and chief financial officer, and Ashley Unwin, the music group’s chief operating officer for the UK and North America have left the company; Terra Firma has been forced to pump more cash into EMI to keep its bankers happy.

The FT suggests that making money from EMI is proving to be sticky:

Terra Firma’s equity injection highlights the scale of the turnround challenge facing Mr Hands without access to the credit markets he had hoped would allow a securitisation of EMI’s music publishing and catalogue businesses. Mr Hands has said EMI remains on target to cut £200m of costs, and has highlighted a £200m improvement to operating cash flow in the six months to September.

Ah, yes, Mr. Hands - a massive improvement to cash flow in the first half of the year. All you need to do is release a Coldplay album every six months, and you'll be back on course in no time.

Lots of back slapping and no champagne corks popping as EMI manages to make a profit in the three months to the end of June.

Guy Hands - one of the men who, in another role, put money into the movie Nine Dead Gay Guys - has been trumpeting his success:

Yes. That'll be it, Mr. Hands. And nothing whatsoever to do with the smart timing of the Coldplay release so the massive sales came just before the close-off of this period's sale figures, then.

Meanwhile: Albarn and Hewlett have turned their backs on Damon's long-time EMI home to offer Monkey: Journey To The West to XL recordings instead. Gossips suggest that Albarn is less-than-thrilled with the Hands regime.

If you invested in a bunch of really, really horrible films in the hope of making a huge loss to set against tax, and somehow managed to end up losing millions of quid, you might keep quiet.

Not so Guy Hands. He had been advised backing cinematic donkeys would net him back £1.40 for every £1 he threw away; trouble was, the loophole he was crawling through was blocked. So, now he's suing the accountants whose advice he followed.

Good lord: throwing tonnes and tonnes of money into a rubbish entertainment endeavour in order to profit from the loss. That wouldn't explain the EMI purchase, would it? Does he keep peering at the sales figures for Living La Vida Loca or whatever that Coldplay album is called and crying bitter, bitter tears?

There's something less than noble about a man who hoped to suck resources from the Exchequer by deliberately making worthless films having a strop because his plans failed - the money he hoped to make would have come from all of us, money which could be spent on hospitals, schools, painting the Queen's bedroom, and so on. He gambled, and lost; rather than taking it on the chin, he - and 74 others - are now demanding that the advisors make good their "losses".

Besides making him look like a bad loser and somewhat greedy, it also means that the world now knows that Guy Hands helped fund the movie Nine Dead Gay Guys, by all accounts a nasty piece of work trading on sexual and racial stereotypes to no great effect. If it had been us, we'd have happily swallowed the loss of a few million to keep that information on the back burner.