CIF wants to bring costs down but may be hamstrung on payBANK OF America Merrill Lynch has appointed Peter Keegan as chief executive of its Irish operations to replace Mike Ryan, who is becoming deputy chief executive of the financial regulator in the Gulf state of Qatar.
As chief executive of Merrill Lynch International Bank, Mr Keegan, a NUIG commerce graduate who is currently chief financial officer at the bank, will be responsible for managing the bank’s branches in 12 countries.
Merrill Lynch employs 1,800 people in Ireland, of whom 750 work at the international bank.
CONSTRUCTION DIRECTLY and indirectly employed 400,000 people – about one in five of the Republic’s total workforce – when the industry reached its height in2006/2007.
At that stage, the industry had gotten too big. Many of the jobs stemmed from the residential building boom, which produced 90,000 new homes in 2006, at least 50 per cent more than what is reckoned to be needed.
Recently the Construction Industry Federation told an Oireachtas committee that the sector had become unsustainably large. Now though it’s worried that it will end up getting too small.
Publishing its pre-budget submission yesterday, the federation warned that employment could tumble to 100,000 by the end of next year from 200,000 currently.
At the same, vice president Philip Crampton predicted that a failure to tackle this decline would result in professionals such as architects and engineers emigrating.
The federation is asking the Government to help by, among other things, ensuring that it continues with its plans to build roads, new schools, waste water treatment plants and the like, all of which are needed.
Costs have come down by about 20 per cent, so the State can get more value for its money.
Surprisingly, though, one area where the adjustment has been slow to adapt to the new reality is pay. A registered employment agreement governs pay on building sites. While rates reached above its terms during the boom, and are now heading back down, the CIF believes that its conditions are now too expensive.
However, it cannot cut pay below its terms, as the agreement is registered and is legally binding. Pay can only be cut with the unions’ agreement, which, given their aggressive stance on the State’s wage bill, is unlikely to be forthcoming.
The CIF has commissioned a report on payment rates in the industry, which is due soon. Given what’s happened to the sector over the last two to three years, it would be a surprise if it recommended anything other than cutting pay, but implementing that would depend on a long – and presumably fraught – industrial relations process.
Changing of IN&M guard?
All change at Independent News Media? There is many a slip twixt cup and lip, but the meeting of INM bond-holders called for 11am today could be the decisive step in the ending of Sir Antony O’Reilly’s decades-long control of Ireland’s largest media company.
Arguably, control slipped from Sir Anthony’s hands months ago as the group has been dependent on the forbearance of its bondholders and bankers since missing the deadline to repay €200 million this summer.
Today will see that power shift become more tangible as the bond-holders vote on a proposal that could see them end up with somewhere between 46 per cent and 76 per cent of the company.
The existing large shareholders, the O’Reillys and Denis O’Brien will be diluted down to about 14 per cent each, assuming they take up their rights in the rights issue, associated with the debt for equity swap.
While the board will remains as it is for the time being, with the O’Reilly fraction dominant, the fundamental dynamic will have changed. From here on out, the banks – owed €745 million – will only continue to support the company on tough new terms. They will have the final say on dividends, capital expenditure, acquisitions and asset disposals.
The new shares will be distributed to the bond-holders pro-rata to their debts. The largest holder is owed €20 million and will end up with between 4.8 per cent and 7.7 per cent.
The company will go from having a share register dominated by two large factions, both holding blocking stakes, to a hodge podge of bond holders the majority of whom don’t want to be there at all.
The ability of either the O’Reillys or O’Brien to move to rebuild their stakes and influence in the aftermath of the debt for equity swap is an unknown. But – on the basis of his counter-offer to put €100 million into the group – O’Brien does have some cash to spend.
Without that, the group looks ripe for a takeover or a break up, provided it is one that makes sense to the people that matter now – the bond-holders and the banks.
TODAY:
BANK OF America Merrill Lynch has appointed Peter Keegan as chief executive of its Irish operations to replace Mike Ryan, who is becoming deputy chief executive of the financial regulator in the Gulf state of Qatar. As chief executive of Merrill Lynch International Bank, Mr Keegan, a NUIG commerce graduate who is currently chief financial officer at the bank, will be responsible for managing the bank’s branches in 12 countries. Merrill Lynch employs 1,800 people in Ireland, of whom 750 work at the international bank.
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