Arnotts management secures backer willing to bid for retailer’s IBRC loans

The management team at Irish retailer Arnotts is believed to have secured a backer willing to bid for the retailer's loans with Irish Bank Resolution Corporation, which are up for sale.

It is unclear who the backer is but informed sources said it was a party "knowledgeable of retail". Ulster Bank, which jointly controls Arnotts with IBRC, is understood to be supportive of this bid, although this could not be confirmed with the British lender last night.

The offer is believed to have made it through to the second stage of bidding for the loans, which is being run by the bank’s special liquidators at KPMG.

IBRC’s loans to Arnotts amount to about €230 million, while Ulster Bank is owed about €140 million.

Joint control of Arnotts
These were mostly related to the ill-fated Northern Quarter property development around Arnotts' Henry Street store.

The two lenders took joint control of Arnotts in 2010 and Ulster Bank’s support for a bid will be seen as key for any group seeking to purchase Arnotts’ IBRC loans.

Arnotts, which is led by chairman Nigel Blow and chief executive Ray Hernan, engaged financial group Investec to seek a potential acquirer for the IBRC loans.

The management team faces stiff competition to acquire the IBRC loans with United Kingdom department-store retailer Selfridges also believed to be through to the second round of bidding.

Selfridges is owned by wealthy Canadian businessman Galen Weston and is a sister company of Irish department store group Brown Thomas. Mr Weston could well seek to acquire the Ulster Bank loans, also.

Boston-based Palladin Consumer Retail Partners, which ran Arnotts on behalf of its lenders for three years, is also believed to have expressed an interest in the company’s IBRC loans but it is unknown if it has been shortlisted.

The market value is likely to be well below the face value of the retailer’s loans.

Arnotts’ loan is being sold as part of IBRC’s Evergreen portfolio.

Shortlisted parties
This comprises 13 individual corporate loans such as those relating to stockbroker Davy, fuel group Topaz, Jurys Inns and TV3, as well as a portfolio of loans called Tranche 14, reported to vary in size from €100,000 up to €70 million.

The liquidators intend to open a data room on November 11th to shortlisted parties with December 6th set as the date for full and final bids.

They would then hope to sign contracts with the successful bidders by December 31st, the deadline set by the Government.

Any loans not sold by the liquidators of IBRC will be transferred to the National Asset Management Agency to be worked out over time.

Most of the corporates are keen to avoid this scenario, viewing involvement by Nama as a negative for the smooth operation of their businesses.