Cerberus collected €100m in Nama developer loans

US company Cerberus collected €100 million in repayments from developers whose loans it bought from Nama in the controversial Project Eagle sale in the eight months following its deal with the Stage agency in 2014, new figures show.

Cerberus Capital Management’s €1.6 billion purchase of the loans in April 2014 is now the focus of criminal and parliamentary investigations. These were prompted by claims that Northern politicians and business figures were to share £6 million in fees transferred from Belfast lawyers, Tughans, which worked on the sale, to an Isle of Man bank account. The company itself denies any wrongdoing.

Unpaid balances

Accounts just filed by Promontoria Eagle, the company that Cerberus used to buy Project Eagle, state that it collected £73.2 million (€100 million) on the loans between April 17th and December 31st 2014, the eight months following its agreement with Nama. The unpaid balances due on the debts it acquired were £4.35 billion.

The accounts show that the company borrowed £438.5 million in two loans at high variable rates from its immediate parent, Netherlands-based Promontoria Holdings, and £730 million from Japanese bank, Nomura International, to buy the Project Eagle portfolio.

Cerberus uses this structure for its other Irish-registered companies as it allows them to avoid significant amounts of corporation tax. Figures recently filed by three other subsidiaries of the US group show that they paid just €10,320 to the Exchequer on a combined turnover of €224 million.

Promontoria Eagle paid £1,947 in corporation tax in 2014. Its business generated income of £111 million and ended the year with £7,788 profit. It owed a total of £1.16 billion to its parent and Nomura.

Its accounts say that after December 31st there “continued to be significant collections” on the loans it bought. Cerberus recently said it had reached agreements with borrowers responsible for 96 per cent of the €4.35 billion due. It is likely that some of those deals involved writing off part of the debts involved.

A number of high-profile developers whose debts were included in Project Eagle – Paddy Kearney’s Kilmona, Noel Murphy’s MAR Properties, Lagan Development Holdings and Frank Boyd’s Killultagh Estates– all refinanced their liabilities in recent months. This meant they paid off Cerberus with money borrowed from new lenders. Kilmona, MAR and Lagan refinanced their debts with another US company, Jefferies Loancore, while Killultagh opted for London-based ICG Longbow.

Meanwhile it has emerged that another US fund, Pimco, continues to dispute Nama’s account of why it left the Project Eagle auction in March 2014.

Success fees

Pimco dropped out after telling Nama that it had discussed paying £5 million in success fees each to Frank Cushanahan, a former member of the agency’s Northern Ireland Advisory Committee, Tughans, and US lawyers, Brown Rudnick. The State agency’s chairman, Frank Daly, maintains that Nama left Pimco with no choice but to withdraw its bid for Project Eagle.

However, the company’s chief legal officer, Tom Rice, has written to the Northern Ireland Assembly finance and personnel committee saying Pimco voluntarily told Nama of the fee deal and left the process itself. He adds that the decision demonstrates “the emphasis we place on conduct of our business, the high standards we expect of counterparties and the importance we place on protecting our reputation”.

The assembly committee is investigating the entire sale. The UK National Crime Agency and Law Society of Northern Ireland are investigating the Isle of Man fees transfer.