Boardroom battles cast shadow on property empire
The complexities around Treasury’s corporate structures and its business dealings means its future is clouded by doubt
THE SLOGAN on the front of Treasury China Trust’s (TCT) 2011 annual report was “moving ahead”.
In fact, the company’s share price has been in retreat, slipping about 47 per cent from its level of two Singapore dollars a share roughly a year ago.
In a five-page chairman’s statement, Irish businessman Richard Barrett, a significant shareholder in the Singapore-listed property developer, strikes a largely upbeat tone.
Except for the last paragraph where he cautions that certainty as to the availability of funding from Chinese banks for the real estate sector was “patchy at best”.
However, he added that TCT’s “cashflow, prudent gearing and strong banking relationships see your company well placed to overcome this and prosper”.
Remarkably, there’s no mention of the enforcement action on January 9th undertaken by the National Asset Management Agency against Treasury Holdings in Dublin.
Nama is owed about €1.7 billion in loans by Treasury Holdings as a result of borrowings transferred from Irish-owned banks from 2010 onwards.
It called in most of these loans and had receivers appointed to the assets behind the borrowings.
TCT does not have any direct link to the Dublin-based Treasury Holdings, but its fortunes have become entangled with the insolvent Irish property developer due to the involvement of Barrett and Johnny Ronan in both entities.
Barrett and Ronan jointly own Treasury Holdings. Between them, they control about 30 per cent of the shares in TCT.
Last week, Barrett acquired two subsidiaries of Treasury Holdings that had provided management and property services to TCT since it was listed on the Singapore stock market in June 2010.
The entities were Treasury Holdings Real Estate Pte Ltd (THRE), which acts as the trustee manager to TCT, and Treasury Holdings (Shanghai) Property Management Co Ltd, a property manager for TCT. The sales were announced to the Singapore stock exchange on August 28th.
Between them, the two companies earned 24.7 million Singapore dollars in fees from TCT in 2011.
TCT is a substantial commercial property developer in China, with assets in Shanghai, Beijing and Qingdao. Its gross assets under management were more than 2.7 billion Singapore dollars at the end of 2011.
The deals were concluded in haste the night before as Barrett feared that Treasury Holdings could have been wound up in the High Court as a result of an action by KBC Bank Ireland, which is owed €75 million in relation to the Spencer Dock development.
Barrett feared that this could have resulted in a breach of covenants around a €44.5 million bond held by TCT with Forum Partners.
Forum would have been entitled to call in the sum owed by TCT, which would not have had the free cash to meet this demand.
Whether Forum would have actually proceeded in this manner is not clear.
At the time of the announcement of the sale of the two Treasury subsidiaries, no sale price was given and other details about the transactions were scant.
Barrett subsequently told The Irish Times that he personally agreed to pay €2.263 million for the two companies. It later emerged that this was to be paid in tranches over a two-year period.
This sum was the higher of two valuations secured from Irish accountancy firms that he wouldn’t identify. He said the company’s auditor was not one of them. KPMG audits THRE.
On August 28th the transactions were mentioned in court by KBC and Nama during a hearing on a winding-up petition filed by KBC.
Nama changed its stance on that action from “neutral” on Monday to joining KBC in pursuing a winding-up of Treasury as a result of the deals emerging.
“There is nothing to hide here,” Mr Barrett told The Irish Times in an article published on August 31st.
He added that under section 139 of the Companies Act 1990 any transfer of assets made by a company that then goes into liquidation could be reversed if it was not done at fair market value.