Investors seeking to bid up to €950 million to buy O’Flynn-linked loan book from Nama

Up to five investors are understood to be willing to bid at least €950 million to buy the loans given to the property group controlled by Michael O’Flynn from Nama, although the State agency has yet to put them on the market.

Mr O'Flynn, the main shareholder behind Cork-based O'Flynn Construction and Tiger Developments, was one of the "top 10" developers whose loans were the first taken over by Nama when it began buying property-backed debt from the Republic's banks in 2010.

His businesses had liabilities of about €1.5 billion, tied to property developments in Ireland and Britain that included the Elysian Tower residential tower in Cork and commercial projects in London and Edinburgh.

Approached Nama
Yesterday it emerged that up to five institutions in all are circling the loan portfolio and have approached Nama about the possibility of buying the debts.

Deutsche Bank, specialist investor, Apollo, which bought credit card company MBNA's Irish business and US-based Lone Star, whose Irish division is led by Eddie Byrne, who was head of lending at Anglo Irish Bank's US branch, have all been named as possible suitors.

They are bidding about €950 million for the loans, more than 60 per cent of the portfolio’s original value. It is thought that the agency itself is targeting a price of about €1 billion.

This implies that Nama would make a profit on the sale, as it bought developers’ debts from the banks at an average discount of 57 per cent, although in the case of the O’Flynn-related loans, the haircut is not likely to have been as severe as that.

Earlier this year, Nama sold loans linked to developer David Courtney in a portfolio dubbed Project Aspen for 25 per cent of their original value in a deal that the agency itself backed through its own vendor finance scheme.

It was thought that the agency would hire advisers to take bids on the loans associated with Mr O’Flynn’s companies during the summer. There are growing concerns that it could now be overtaken by the sale of the first IBRC – formerly Anglo Irish and Irish Nationwide – loan book, which includes debt associated with retailer Arnott’s and fuel business Topaz.

The former bank's special liquidator, Kieran Wallace, is due to put these assets on the market this month, and while the process will not directly involve Nama, a number of the likely buyers for the property developer's liabilities could also be interested in bidding for the IBRC debts.

The agency did not comment yesterday. Its policy is not to discuss individual cases in public.

Mr O’Flynn’s businesses have continued to trade since Nama took over their loans. A number of those whose liabilities were transferred to the agency have not.

Developer Bernard McNamara was declared bankrupt as a result of his personal property ventures, the Johnny Ronan- and Richard Barrett-controlled Treasury Holdings was liquidated while Liam Carroll's group had collapsed ahead of the agency's foundation.

Raised cash
O'Flynn Construction was able to raise cash from US-based joint venture partner to fund a student accommodation project in London in 2010, as Nama's work was getting under way.

The developer’s companies are unlimited, and so are not obliged to publish accounts. However, a spokesman for the business last December told the media that their overall financial health was “positive” after figures for part of Tiger Developments were filed in error.