K Club in the red despite 6% sales boost
Accounts show Smurfit deal with Nama resulted in a €28 million writedown
The K Club is now fully owned by Dr Smurfit after he bought out property developer Gerry Gannon’s 50% share. Photograph: David Cannon/Getty
Financial statements signed off last month by the directors of the K Club show that the luxury Kildare golf resort owned by Michael Smurfit made a loss in 2012 of almost €5 million. This was despite the fact that it boosted its sales by almost €700,000 to €11.6 million.
The accounts confirm that the Smurfit family completed a desktop revaluation of the resort without using professional valuers to €67 million, as revealed last week by The Irish Times. This resulted in a writedown in the group’s assets of €16.2 million.
Despite the writedown and trading loss, the K Club, which is now fully owned by Dr Smurfit after he bought out property developer Gerry Gannon’s 50 per cent share, recorded a decline in its accumulated deficit of €7 million to €26.7 million. This was mainly because the 2012 deal to buy Mr Gannon’s stake, which was under the control of the Nama, included a write-off of the K Club’s bank debt of €28.4 million, according to the accounts.
Referring to the deal by Dr Smurfit to take control of Mr Gannon’s stake from Nama, the accounts state: “An agreement to restructure the group’s external bank loans was completed in April 2012. This included additional shareholder investment in the form of a shareholder loan of €35 million from [Dr Smurfit] to fund partial repayment of debt.”
The accounts make a reference to “debt forgiveness” impacting positively on the company’s finances. The deal by Dr Smurfit to buy Mr Gannon’s stake was reportedly worth about €40 million in total.
Some 50 per cent was sold just before foreign investors started creeping back into the market looking for Irish hotel assets. It had previously been offered to a number of international buyers for a reputed €60 million, without success.
The accounts, which are for the group holding company Bishopscourt Investments, also state that Dr Smurfit wrote off loans owed to him by the K Club in return for taking ownership of paintings belonging to the resort.