LIAM CARROLL’S Zoe Group of companies plans to roll up and postpone interest payments of €22 million on outstanding bank loans totalling almost €1.3 billion until July 2011, the group has told the High Court.
The interest roll-up is part of the group’s survival plan which is contingent on a two-year moratorium on interest payments.
The group plans to roll up interest of €7 million in 2009, €10 million in 2010 and €4.8 million in the first seven months of 2011 until July when the moratorium ends.
The court was told that interest owing to ACC, which amounted to €300,000 a year, was not being paid and is being rolled up. Interest will be paid in full to Bank of Ireland, KBC Bank Ireland and Bank of Ireland under the plan.
The court was told ACC, which is owed €136 million, was not paid interest as it was the last bank to provide loans to the group.
ACC has argued against the plan, saying it would increase the group’s exposure to lenders at the end of the moratorium.
Bill Shipsey SC, for the companies, said that ACC had competed with KBC Bank Ireland for a loan provided in August 2007 and another loan facility agreed in January 2008 and drawn in March.
Mr Justice Frank Clarke said that it was well known that banks had vied with each other to lend to developers and were “perhaps now regretting it at their leisure”.
Earlier, Mr Shipsey said interest roll-up tended to have “a dirty connotation to the layman’’ when it was in fact common in development lending where there was no prospect of income for a period.
ACC argued that expected interest rate increases of perhaps 1 per cent to 2 per cent from 2010, and up to 4.25 per cent by 2012 which could add up to €13 million to the companies’ debts.
The court was told that a 0.5 percentage point increase in interest rates would add €4 million to the group’s interest bill.
