Anglo Irish defers €2.5m fee for Becbay

 

THE COMPANY behind the redevelopment of the Irish Glass Bottle Site at Ringsend in Dublin had its bank debt reduced by €2.57 million in 2007 due to the deferral of arrangement fees on loans of €293 million, new accounts show.

Anglo Irish Bank, which is financing the project, made a loan of €288 million to Becbay, the firm owned by the consortium which agreed to buy the Ringsend site for €412 million in November 2006.

The remainder of the purchase price came from the consortium, which comprises developer Bernard McNamara, financier Derek Quinlan, clients of Davy stockbrokers and the Dublin Docklands Development Authority (DDDA).

Anglo has deferred arrangement fees for property developer clients in the past, but the practice has become less common due to more restrictive lending amid the slowdown in the property market.

Becbay valued the 24.5-acre Ringsend property at €449 million at the end of 2007, an increase of almost 9 per cent on the site's purchase price, according to accounts just filed for the company.

Mr McNamara's company Donatex made a loan of €62.5 million to Becbay last year. He also made a personal loan of €101,000. Mr Quinlan's firm Mempal loaned €51.3 million, while the DDDA made a loan of €36.1 million.

Becbay made a pretax profit of €36,500 in 2007. The firm said construction on the site would start in April 2009. A company spokesman said the decontamination of the site, initially due to be completed by January, was "ahead of schedule" and would be completed in November. He declined to comment on the deferral of loan arrangement fees, saying it was "a private matter".

Assessing risks to the company, Becbay's directors said the firm had "sufficient" banking facilities in place and "continued equity support of all shareholders". Becbay said it had hedged on the interest bill on its bank loans. Some €202 million of the firm's bank debt of €293 million was on a fixed interest rate, while €91 million was a floating rate.

The company had incurred a liability of €502,000 on its interest rate swaps by the end of last year.

Becbay plans to develop 2,166 apartments and 252,000sq m of commercial space. The project will generate revenues of €1.76 billion and a pretax profit of €296 million, according to a 2006 information memorandum for the development. Becbay received €138.4 million in loan stock as equity for the site's purchase and development.

Davy's investors put up €52.25 million, with Mr McNamara personally guaranteeing their capital.

Under the investment agreement, the Davy investors will be paid an annual return of 17 per cent over seven years. Mr McNamara's firm, BMcNCO, can repay them after two years with at least a 40 per cent return and in minimum tranches of €1 million.