Nothing Clear about RBS bidding process

Project Unclear might have been a better title for the portfolio of loans being sold by Ulster Bank's parent company, Royal Bank of Scotland, given the confusion about the bidding process.

The loans are backed by 1,850 acres of prime residential land in Dublin that could accommodate 20,000 houses or more. These were originally held by some of the country's most prolific boomtime builders, including Liam Carroll, Joe O'Reilly and Sean Dunne.

Final bids were lodged yesterday with three parties rumoured to have submitted offers. We know Cork developer Michael O'Flynn and listed Irish property group Cairn Homes lodged bids, but the identity of a third player was, ahem, unclear.

Strong rumours circulated that Cairn teamed with Lone Star to put in a knock-out bid for the loans, but the indications last night were that the US investment group had not lodged an offer for the portfolio, either solo or with a partner.

Lone Star’s absence was a surprise given that it was a bidder at an earlier stage of the process and was thought to be one of three parties shortlisted for the final round.

Cairn’s corporate activity this week would suggest it is well-placed to secure Project Clear. It bolstered its war chest to the tune of €202 million-€150 million via a senior secured debt facility announced on Tuesday and €52 million through a share-placing yesterday.

"The funds raised will enable us to continue to acquire attractive and well located residential development sites and provide us with the additional financial strength to scale our house-building operations," Cairn's chief executive Michael Stanley said in a stock market statement on its share-placing.

Having recently put together a funding package of €400 million to secure control of his business in Ireland from private equity group Blackstone, Cork's O'Flynn is also well-placed to secure the portfolio with his new backers, New York-based Avenue Capital Group.

One thing is clear: the final price will fall short of the €650 million guide reportedly sought by the bank’s agents at the beginning of the process on loans that had a combined face value of €2.1 billion.

A price of between €400 million-€500 million is expected when the winner is announced this week, suggesting concerns about another Irish property bubble emerging are premature.