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UPDATE: 'Terra's Firm' Vengeance

NEW YORK (VIP NEWS) — Terra Firma buyout house chief executive Guy Hands testified on Wednesday he had no paper trail to support his allegations that a Citigroup Inc banker friend lied to him in three May 2007 phone calls about bidding for iconic music company EMI.

Asked during hours of tense cross-examination in a New York court by Citigroup's high-profile trial lawyer Ted Wells whether he was aware of "any piece of paper in the company" of those conversations, Hands replied: "I have no bits of paper" and "I am not personally aware of any, no."

On Tuesday, financier Hands told the nine jurors who will decide his fraud claim in U.S. District Court that he would not have paid 265 pence per share for EMI had his onetime Citigroup banker friend, David Wormsley, not told him of a 262 pence per share bid by rival private equity firm Cerberus Capital Management.

There was no other bid and Terra Firma Capital Partners says it overpaid in its 4 billion pound ($6.4 billion) deal, which came to epitomize the perils of loading companies with debt and the associated risks in the leveraged buyout bubble.

Evidence presented in court showed Hands, 51, and Wormsley remained business associates and friends after the EMI deal closed, attending dinner parties, the opera and going on holiday together with their wives. Wormsley, 50, who has sat just feet away from Hands in court, is expected to tell his side of the story later in the trial.

The trial began on Monday. Terra Firma is seeking as much as $8 billion in damages from Citigroup, which denies the allegations. It says the buyout house sued in 2009 after it realized it made a bad business deal.

Citigroup provided 2.6 billion pounds ($4 billion) in loans for the purchase of EMI, which is struggling under the weight of its debt and trying to keep itself out of the hands of the bank. The recording company is known for having stars such as Nat King Cole, The Beatles, Pink Floyd and scores of others on its label.

The trial centers around three telephone conversations between Hands and Wormsley in the days leading up to the May 21 deadline for bids to buy the flagging company.

"I cannot remember details of conversations, but the fact that we came to 265 (pence per share) was after conversations with Mr Wormsley," said Hands, whose voice trembled at times under cross-examination.

Under questioning on Tuesday by his own high-profile lawyer, David Boies, Hands testified that Wormsley told him on the eve of the deadline "we had to get in" to beat Cerberus and "he told me not to play any games with the price."

The case is Terra Firma et al v Citigroup et al, U.S. District Court for the Southern District of New York, No. 09-10459.

According to Billboard