IFI sale failure nets bank EUR200,000

A US bank that advised the shareholders in Irish Fertiliser Industries was paid more than €200,000 weeks before the company collapsed, even though it had failed to find a buyer for the group.

Documents released under the freedom of Information Act show that Bear Sterns, the US merchant bank, was hired last year by Imperial Chemical Industries - the other shareholder in IFI - to find a buyer for the troubled fertiliser company. The Government - which owns 51 per cent of the company - agreed to pay its share of the fees. The documents reveal that Bear Sterns sought more than €200,000 last September from the Government and ICI for work done in trying - unsuccessfully - to secure a buyer for the troubled fertiliser company. IFI was put into liquidation a month later.

Bear Sterns had failed to find a buyer but had been in talks with the Finish chemicals group Kemira, who had expressed an interest in IFI. The bank had proposed a hybrid deal under which the Finish group would provide ammonia - one of the raw materials for fertiliser - to IFI and have an option to buy the company at a later stage.

According to the documents, Bear Stern sought payment of €200,000 plus expenses and VAT for work done on the deal at this stage. The Department of Enterprise and Employment confirmed last week that it paid its share of the €200,000 plus expenses and VAT sought by Bear Sterns.

The documents reveal the US bank was the only firm of advisers to make a "meaningful bid" for the IFI contract. The terms of the contract indicate that at one stage Bear Sterns might have hoped to realise €100 million for the company.

Kemira decided subsequently not to proceed with the revised deal and IFI was put into liquidation the following month.

The documents released by the Department of Enterprise and Employment also reveal that at this stage the Tánaiste, Ms Harney, came under pressure to allow the Belfast IFI plant survive while allowing the plants in Arklow and Cork go under.

Sir Reg Empey, who at the time was Northern Ireland Minister for Enterprise, wanted the Belfast operation of Irish Fertiliser Industries to be sold to Kemira as a "stand alone operation". A letter to the Tánaiste - who is also Minister for Enterprise and Employment - from Sir Reg, dated September 13th, reveals Sir Reg and the Tánaiste had discussed the situation some weeks earlier during a North-South trade mission to Washington.

In the letter Sir Reg said: "If there is no other realistic proposal which involves the continued operation of all three plants, I would suggest that the IFI shareholders consider an approach to Kemira...regarding the possible take-over of the Belfast plant as a stand-alone operation." He asked that the board and shareholders of IFI "seriously consider" the option at a meeting scheduled for Monday, September 16th, during which the rapidly deteriorating situation was to be considered.

The records indicate the Tánaiste did not respond until September 30th, saying that Sir Reg's suggestion "would be borne in mind" in discussions with IFI.

On October 15th, the shareholders accepted the board's request that the company be put into liquidation. However, the departmental records show that ICI and the Government refused the board's request for a Members Voluntary Liquidation as this would have required them to give an unlimited indemnity.