Bank's biggest borrowers face Nama deadline

Fri, Feb 8, 2013, 00:00

Irish Bank Resolution Corporation’s biggest borrowers have six months to refinance their loans or face having them sold to a third party or transferred to the National Asset Management Agency.

The bank’s high-profile clients include telecoms and media businessman Denis O’Brien and property developer Paddy McKillen, who is battling the Barclay brothers for control of some of London’s best-known luxury hotels.

About €15 billion of loans that remain on IBRC’s books have been taken over by the special liquidators, Kieran Wallace and Eamonn Richardson of KPMG, appointed by the Government. They will seek to get full current value for these loans by the middle of this year.

The various loans will be sold separately and if the liquidators cannot achieve the current value, they will transfer to a special purpose vehicle operated by Nama, the state agency set up to deal with the toxic property loans of Ireland’s banks.

Nama chairman Frank Daly said it would seek to realise the “maximum possible return” for taxpayers over time.

Other high-profile entities with loans outstanding with IBRC are Dublin department store group Arnotts, and fuel groups Topaz and Applegreen.

Mr O’Brien’s borrowings are reported to have been as high as €833 million in 2009.

It is not clear how much he now owes the bank but reports have suggested the figure is below €500 million.

Mr McKillen owes IBRC about €300 million.

Quality of assets

At least some borrowers will be expected to move quickly to secure a refinancing of their loans in a way that is favourable to them, rather than having them potentially auctioned off to the highest bidders. There is likely to be significant interest from overseas investors in some of the loans, given the quality of the assets that they are secured against.

Some borrowers might be loath to let their loans fall under the remit of Nama, which has been forensic in its pursuit of debtors for repayment.

Topaz, Ireland’s biggest fuel group, recently renegotiated its loans with IBRC out to 2015. Its core term debt with IBRC is now €110 million, while it has working capital facilities of €105 million.

Arnotts is believed to owe more than €150 million to IBRC.

Selling such a volume of loans into the market at the one time is likely to prove challenging. The special liquidators declined to comment.