INBS bondholders lose liquidation attempt

Tue, Dec 21, 2010, 00:00

TWO OF Irish Nationwide Building Society’s (INBS’s) subordinated bondholders lost an attempt to revive their UK lawsuit seeking to have the nationalised property lender liquidated.

The bondholders, Satinland Finance Sarl and Trimast Holding Sarl, had no hope of prevailing in the dispute and should not be allowed to appeal last month’s dismissal of the case, a panel of three judges ruled yesterday at the Court of Appeal in London.

“I am satisfied that the judge was right in concluding the claim would fail,” Judge Terence Etherton said at the hearing. “This application should be dismissed.”

The investors sought to force a BNP Paribas unit, which was acting as debt trustee, to file a winding-up petition against INBS.

The suit came after Minister for Finance Brian Lenihan said on September 30th that subordinated bondholders would be expected to share in the cost of bailing out INBS and Anglo Irish Bank. Mr Lenihan said the cost of rescuing the lenders could be as much as €39.7 billion.

The bondholders’ lawyer, Nick Brocklesby, did not immediately return a call seeking comment.

Among the holders of Irish Nationwide-issued subordinated debt is Russian billionaire and owner of Chelsea football club, Roman Abramovich. In October, his investment vehicle, Millhouse, threatened to sue Ireland over its treatment of junior debt-holders in Irish Nationwide.

“We urge Irish authorities to reconsider their position on INBS subordinated bonds and come out with a detailed plan on what is going to happen to this institution,” Millhouse said. It is believed Millhouse bought the subordinated bonds in August 2009.

Satinland and Trimast, which hold 25.6 per cent of Irish Nationwide’s 13 per cent lower Tier 2 bonds due in 2016, sued the lender and BNP Paribas Trust over claims Ireland had indicated the lender would not pay interest or principal as it becomes due on the notes.

Irish Nationwide won dismissal of the case, leading to the appeal.

The Government took INBS into State control earlier this year as the National Asset Management Agency (Nama) applied heavy discounts on the value of its property development loans.

INBS is estimated to have about £700 million (€820 million) of debt outstanding from four bond issues. Its bonds are trading at a significant discount in the secondary market, with the 2016 bonds quoted at about 30 cents on the euro. – (Bloomberg)