AIB seeks to guide ICG bid through troubled waters

AIB HAS installed its former senior executive Walter Coakley on the board of South Morsten, the investment vehicle used by property developer Liam Carroll to buy his shares in Irish Continental Group (ICG) in 2007.

Carroll, ICG’s biggest shareholder, is believed to have borrowed more than €200 million from AIB in 2007 to acquire his 29.24 per cent stake in the listed ferry company and it seems the bank is keen to ensure that its interests are properly looked after in the event of the Philip Lynch-led Moonduster and Eamonn Rothwell consortium finally tabling a bid for the company next Wednesday.

Not unnaturally, AIB is keen that Carroll receives the best price possible for his ICG holding so that he can repay at least a large chunk of his debt.

Carroll paid up to €24 a share for his ICG stake and is significantly under water on his holding. ICG’s shares are currently trading at around €13.

It is understood that Moonduster and Rothwell are preparing to offer €14 – €15 a share in cash with a loan note attached worth another €1 – €2 a pop to ICG investors.

The company’s independent directors are believed to be pushing for closer to €18 a share, with their preference being for an all-cash offer.

Ironically, AIB is one of a consortium of banks preparing to provide funding to Moonduster and Rothwell for their bid. It is also thought to have provided funds to Rothwell to buy ICG shares in 2007.

We can only presume that the banks will be urging the consortium to strike the best deal possible.

While Bank of Ireland, Barclays and Bank of Scotland (Ireland) are believed to be on board in principle, AIB’s interest is understood to have cooled somewhat in recent weeks.

Some observers believe this might be a byproduct of the impending establishment by the Government of the National Asset Management Agency (Nama), to handle banks’ toxic loans to developers. Carroll’s debt to AIB relating to ICG could conceivably end up with Nama.

The bank will no doubt want to be seen to minimise its exposure to Carroll’s expensive foray into ICG.

The ICG takeover saga has rumbled on for almost two years, with the latest potential offer emerging six months ago.

Even at this advanced stage in the process, it’s not certain that a bid will emerge on Wednesday. Some delicate negotiating remains to be done.