Zoe creditors move to seize control of properties:IT WAS inevitable that the lenders to Liam Carroll's Zoe Group would mobilise quickly to seize control of properties after the courts extinguished any hope of the group's survival last Tuesday.
Six of Zoe’s eight lenders, which account for most of its €1.3 billion, have seized or are taking control of properties by appointing insolvency practitioners as receivers.
Seven receivers (Anglo Irish Bank has appointed two) will now assess the group’s labyrinthine structure to assess which lender has security over which properties. They will also seek to assess whether lenders have first, second and subsequent calls over assets.
For the domestic banks, which account for 54 per cent of the bank debt, receivers will adopt a holding pattern, sitting on assets until there is clarity over how the National Asset Management Agency (Nama) will operate (if the legislation is passed) and the agency’s interaction with Zoe and Mr Carroll’s two other property groups, Dunloe and Orthanc.
Undeveloped land will be held in a frozen state and rents will continue to be collected on residential and investment properties. Further work may be required to finish half-built properties such as the new headquarters for Anglo Irish Bank, which will need €8 million in further loans to protect the building’s shell from damage.
The foreign banks, which account for the remaining 46 per cent debt, may adopt a different approach as they are unlikely to be able to gain entry to Nama club. ACC, whose pursuit of its €136 million debt sparked the group’s 11-week legal battle for court protection, may seek to recover as much as it can as quickly as it can. However, in a distressed market, holding assets until there is some recovery in the economy may prove to be a better strategy.
In many respects, most of Zoe's banks have adopted in the short-term the strategy that Nama faces in the long-term: move quickly to seize control of properties and then slowly manage those assets. In that regard, Nama is much like a receivership, though a receivership on a national scale. How the Nama receivership will act with the differing receiverships at the Zoe Group will be the challenge. SIMON CARSWELL.
Pre in the palm of O2
Next Friday O2 will start selling the Pre – the touchscreen mobile phone from Palm, the struggling smartphone maker backed by Bono’s Elevation Partners. It’s the latest “must-have” device that O2 has signed up. Since March 2008 it has had exclusivity on Apple’s iPhone but that deal ends early next year when Vodafone will begin stocking the iconic device.
It has been widely reported that Apple squeezed a favourable deal out of operators who wanted a clear run with the iPhone. The Telefónica subsidiary’s British wing cemented its number one slot thanks to the Apple phone and Vittorio Colao, Vodafone’s chief executive, admitted in July that not being able to sell it was damaging business. More than 1.5 million iPhones have been sold in the UK.
Locally O2 won’t discuss iPhone sales, but in July said it was “hugely popular”. The same results also revealed that, with 662,604 bill-pay customers, it had overtaken Vodafone to become the largest “post-pay” operator.
As with all operators, the revenues per user continue to fall – down 7.9 per cent during the year to the end of June from €42.19 to €39.76. Users of web-focused phones like the iPhone and the Pre typically have a higher monthly spend. Full year figures will be closely watched to see if the smartphone effect has pushed O2 Ireland past Vodafone. JOHN COLLINS.
Gold takes shine of dollar
Gold’s dazzling ascent to a record price of more than $1,060 an ounce this week sparked talk in some quarters of precious metal bubbles, blown by speculators with nowhere sane left to pour their money.
“Safe haven” in this context, doesn’t sound wonderfully safe. If you’re not the kind of person who has to worry about what proportion of your investment portfolio is diversified into commodities, the blingtastic price of gold is, generally speaking, bad news, as it reflects fears that a second slump may hit the global economy no sooner than it has emerged from the current one. The double-dippers love gold.
But while it is entirely possible that in five years’ time we’ll be talking about what worthless junk that shiny yellow stuff is, today’s allure of gold for investors says more about the decline of the dollar than anything.
The world's reserve currency is in danger of losing that status if it remains in the extended trough it has been dragged into by low interest rates and the Obama fiscal stimulus package. If you can't profit off the dollar, go for gold. And this week saw a fresh spew of rumours that Gulf states want to start pricing oil in a currency other than the dollar. Gold's status as a quasi-currency may be further cemented in the years ahead if it were to become the transitional currency in which "black gold" is priced. It took comments by Federal Reserve chairman Ben Bernanke to take the gloss off the precious metal. His remark that the Fed is ready to raise interest rates once its economy improves might sound like another statement of the obvious, but it did the trick: the dollar got its much-needed boost and gold ended the week worth slightly less than its all-time high. LAURA SLATTERTY.
Richard Cantillon
Ballyheigue, Co Kerry-born Richard Cantillon can lay claim to be the father of modern economics. His Essai Sur la Nature du Commerce en Général (Essay on the Nature of Commerce in General) was written in 1730 and published in England in 1755, 21 years after his death and some two decades before Adam Smith’s Wealth of Nations.
He is also credited with the origin of the term “entrepreneur” and he enjoyed success as a merchant in London and a banker in Paris, before dying in a house fire allegedly set by a disgruntled employee.
He is a suitable namesake for a new column in which Irish Times business journalists will endeavour to offer timely analysis and comment on the business and economic issues of the day. This column will appear on Tuesdays, Thursdays and Saturdays.
This Week
The ESRI hosts its annual Budget Perspectives conference on Tuesday with new Central Bank chief Prof Patrick Honohan giving his first public address
