EBS seeks payment of loan as land value drops by two-thirds

LANDS IN Co Kildare on which a €19.5 million development loan was secured were valued at some €6 million last June, the Commercial Court has heard.

Following the decline in the value of the lands at Kilcock, the EBS Building Society has brought proceedings seeking judgment for some €18.3 million against M&M Construction Company Ltd and a director of the company, Anthony Murray, arising from guarantees allegedly given by him over the company’s liabilities.

The case was transferred to the Commercial Court this week by Mr Justice Peter Kelly, who fixed November 12th for the hearing of the judgment application.

Lyndon MacCann SC, for the defendants, said their defence would be put on the basis that the loan was not properly repayable at this time. His clients would also contend that the valuation in relation to the property was erroneous and that material properties were not included.

In its proceedings, EBS claims it agreed in June 2007 to provide a €19.5 million facility to M&M Construction, Old Lucan Road, Lucan, Co Dublin, for three years. It claims Mr Murray provided a written guarantee on July 27th, 2007, of due payment on demand of all monies due by the company.

The EBS claims the security for the €19.5 million facility was the guarantee of Mr Murray and a first legal charge over the 28.14 acre site at Kilcock.

It claims the loan terms provided that a maximum loan to value ratio of 66 per cent was to be maintained at all times through the duration of the loan facility, with independent valuations to be provided annually or at any time of the building society’s choosing.

If this term was breached, it claims the entire loan would be immediately repayable.

It is claimed M&M accepted the offer of loan facilities and later drew down some €18.3 million under the facility.

On June 17th last, CB Richard Ellis, property advisers and valuers, had provided a valuation of €6 million on the Kilcock site, with a possible uplift to €8.2 million upon a successful application for planning, EBS claims.

It claims the company was in breach of the term requiring a maximum loan to value ratio of 66 per cent. It had called in the entire facility in July last but the monies had not been repaid and some €18.375 million was due.