Barclays to lodge discounted bid for McKillen debt

Billionaire brothers David and Frederick Barclay will bid for the €800 million loans to Irish property investor, Paddy McKillen, held by the Irish Bank Resolution Corporation, before a blind auction closes today, it has been reported.

Mr McKillen's loans have been put into one loan-book by the IBRC, called "Project Pebble". It includes the €246 million worth of personal loans from Anglo Irish Bank, which is secured by a charge on his 36.2 per cent stake in Coroin Ltd.

Coroin is the parent company of the Maybourne Hotel Group, which owns Claridge's, the Connaught and the Berkeley hotels in London, which have been at the heart of a bitter three-year battle between Mr McKillen and the Barclays.

Last night, the London- based CoStar News reported that the Barclays will lodge a discounted bid for the McKillen debt. If successful, it would effectively end the battle for the luxury hotels.

€600m debt to IBRC
In December 2012, Mr McKillen's side said companies he controlled owed €600 million to IBRC, while he had approximately €300 million worth of personal debt, but it was intended then to cut another €200 million off the combined total.

Mr McKillen is currently before the High Court in Dublin, bidding to prevent the sale by IBRC of his debt to the Barclays. He argues that communications between Department of Finance officials, Nama and IBRC and Barclay representatives were unlawful and improper.

In a significant victory for the Belfast-born businessman, the High Court ordered three Department of Finance officials, including the department's secretary general John Moran and a Nama executive, to give evidence.

The IBRC debt sale is being handled by KPMG. If the Barclays are found to have made the highest bid, the sale will not be able to go through until the final result of the High Court proceedings have concluded.

Rival bids
Lone Star, Deutsche Bank and Davidson Kempner have made rival bids to the Barclays, CoStar News reports. The Barclays have privately made it clear that they will seek to buy the debt from them if they are unsuccessful in the blind auction.

The High Court has also ordered the Barclays to provide a limited disclosure of documents to Mr McKillen detailing contacts between Barclay companies, the Department of Finance, Nama and the IBRC before a full hearing of the case next month.

The order covers communications between any person or entity on behalf of the Barclay interests, or any of the trustees of their family settlements, relate to the proposed acquisition by Barclays of Mr McKillen’s loans with IBRC.