BUSINESSMAN PADDY McKillen personally owed €240 million to Anglo Irish Bank in February 2011 and some €60 million of this debt was secured on his shareholding in the Maybourne hotels in London, he told a court.
Mr McKillen was giving evidence on the second day of his case against companies controlled by brothers Sir David and Sir Frederick Barclay over their bid to take over the Claridges, Connaught and Berkeley hotels in London.
The nationalisation of Anglo in 2009 was a serious blow to him and his companies, he said, and he feared his loans would be transferred to the State’s National Asset Management Agency.
In a bid to reduce the hotels’ debt from 2009, Mr McKillen sought other investors for the hotels, while Irish financier Derek Quinlan and other shareholders supported the Barclays in their bid to take over the hotels.
He claims the Barclays had “infringed and diminished” his rights as director and engaged in a scheme to take control of the company behind the hotels, Coroin.
The other investors should have offered their stakes to him first before selling, he claims, and he disputes Nama’s sale of Coroin’s €800 million debt to the Barclays.
Lawyers for the brothers’ companies said Mr McKillen sought a £5 million-a-year fee for three years from the Qatari royal family to thwart the Barclays’ takeover in a deal where he would take 25 per cent and the Qataris 75 per cent.
Mr McKillen said that the fees were for the management of the £200 million redevelopment of the Berkeley and Claridges hotels.
Kenneth Maclean QC, for the Barclay companies being sued by Mr McKillen, said that the fee “could not possibly be justified” based on a market value of any service he proposed to provide.
The fees compared with Mr Quinlan’s £450,000-a-year management fees and the £350,000 annual salary paid to the hotels’ chief executive Stephen Alden.
The court heard the Qatari deal “ran into the sand pretty quickly” in January 2011 when Mr McKillen discovered that Mr Quinlan and another shareholder, the family of businessman Peter Green, were in talks with the Barclays.
Mr McKillen told the court that he still believed a deal with the Qataris was possible as they were prepared to fund a legal challenge against the Barclays’ purchase of Misland, a 25 per cent shareholder in the hotels, from the Greens.
Mr McKillen told the court that he didn’t know where he was domiciled in 2010, 2011 or currently.
Asked by Mr Justice David Richards where was home, Mr McKillen said: “Dublin, but my family are in California.” He spent most of his time in London, he said.
Asked who had authored a specific document, Mr McKillen said he had handwritten a fax which his personal assistant in Dublin had then typed up as an email.
He told the court that he had never tried typing but that he was “very good at text messages”.
Mr McKillen said in a witness statement Mr Quinlan had regularly used the hotels and ran up a “large unpaid bill” which was discussed by shareholders in 2009.
The hotels had no choice but to issue a claim of £284,000 against him after he refused to pay his bill.
Mr McKillen said that some of the “debt due” related to cash owed on another property deal.
