Guy Hands and David Wormsley

Terra Firma Chairman Guy Hands has lost his multibillion dollar legal suit against lender Citigroup yesterday.  The trial explored Hands’ 2007 purchase of EMI and Hands’ alleged claim that Citigroup’s Chairman of U.K. banking David Wormsley “duped” him into overpaying for EMI. The jury unanimously voted that Citigroup was not liable in the buyout.

The New York Post stated that this verdict could severely impact Hands’ reputation as a “top dealmaker,” and that it could force the buyout firm to lose control of the iconic British label, which had been showing signs of recovery with recent successes such as Katy Perry. Terra Ferma is reportedly “considering its options” and “reserves the right to appeal” the decision, although the company’s investors may balk at putting more money towards legal fees.

Citigroup released a statement, claiming, “We are very pleased that the jury reached a unanimous verdict confirming what we have said from the beginning: that Citi and David Wormsley treated Terra Firma with honesty and integrity in the EMI transaction. The jury’s verdict makes clear that Terra Firma’s irresponsible accusations of fraud were nothing more than a misguided attempt to gain leverage in debt restructuring negotiations.”

Terra Firma acquired EMI in August of 2007 for $6.5 billion.

Terra Firma faces a looming debt deadline on March 31, 2011, and industry insiders are exploring the imminent possibility that Terra Firma could default, which could result in Citigroup selling off EMI’s label and publishing groups. Billboard reports that, at best, Terra Firma hopes for income-generating hits that would provide enough revenue and profits, enabling the company to avert violating the loan covenants with Citigroup.

Chrysalis Music Group, an independent British music publishing company is beginning to draw admiring glances from a number of interested suitors according to the New York Post. Interested parties named by the publication include BMG Rights Management and Warner Music Group.

Chrysalis has confirmed that it has been discussing “merger opportunities,” but failed to disclose any names. This past year has seen a number of high profile music publishing merger and acquisitions. BMG Rights added Cherry Lane, Stage Three Music and Evergreen Copyrights to its roster. Chrysalis recently acquired S1 Songs America.

According to sources, one stumbling block to a completed deal revolves around Chrysalis Chairman Chris Wright’s desire to maintain management control. Wright owns a 29% stake in Chrysalis.

Publishing company values appear to be undergoing some marketplace fluctuation. According to the Post, “Chrysalis has an estimated value of $200 million, although industry insiders believe that figure is overstated and suggest it might be about half that amount.” Bug Music, now named as a possible Chrysalis merger candidate, was previously involved in acquisition discussions with BMG Rights Management among others, but apparently none of the parties were offering a price in the $250-$300 million range which Bug required.

Chrysalis has a Nashville office headed by Executive VP Dale Bobo.