Empire of brick undone by €16m debt

 

BACKGROUND:AT THE peak of the property market in 2007, Pierse Contracting, which went into interim examinership yesterday, had more than €700 million worth of public and private projects under way, with the company’s construction works including an extension to Cork University Hospital and the Department of the Environment headquarters in Wexford.

At the time, it was ranked the third-biggest building group in the State, behind Sisk and McInerney, the latter of which has also recently sought court protection from its creditors.

Its activities in the more sheltered, less volatile civil engineering space did not insulate it from the collapse in the housing market, however.

At the heart of Pierse’s problems lies a €16 million debt owed to it by Gannon Homes, the loans of which have since transferred to the National Asset Management Agency (Nama).

Pierse Contracting’s relationship with Gannon Homes was the subject of a High Court dispute earlier this year. During this case, Mr Justice Peter Kelly frankly described it as “rather astonishing” that Pierse had carried out some €48 million worth of construction at the major development in Clongriffin, Grange Road, Baldoyle, in Dublin without any formal contract having been signed.

A dispute between the companies arose in relation to whether works done by Pierse were part of the original scope of the development – Pierse had paid a subcontractor to do the work, for which Gannon had refused to pay Pierse.

North Dublin Labour councillor Seán Kenny last night expressed concern at the High Court move. “Much of the Clongriffin Marrsfield housing and apartment development is still unfinished, including the roads infrastructure connecting Marrsfield to the newly opened Clongriffin Rail Station to the main Hole in the Wall Road in Donaghmede,” Mr Kenny said.

He added that he would be seeking a report from Dublin City Council management on Marrsfield in light of Pierse’s examinership at a meeting next Monday.

The chain-like system of credit and debt means that it is now Pierse’s turn to pose potential difficulties for its creditors as a result of its cash-strapped financial position.

The examiner, chartered accountant John McStay, will now have to seek new investment to sustain the viable part of the group’s contracting business and work out a scheme of arrangement acceptable to its creditors.

The directors of Pierse Contracting, which was founded in 1978 by Ged Pierse, are Mr Pierse, Charles Norbert O’Reilly, Ferghal O’Nolan, Kieran Duggan and Martin Murphy.

The directors of the related company, Pierse Building Services, which is involved in the fitting-out and refurbishing of premises, are Mr O’Nolan, Mr O’Reilly and Adrian Burke.

While the company took pains to cut its overheads since the end of the building boom and shed staff along the way, its approach wasn’t always welcome.

Last month, trade union Siptu served a strike notice on the company after it failed to honour a Labour Court recommendation on a redundancy package for employees.

While Jervis Shopping Centre and Dublin Civic Offices on Wood Quay are perhaps its two highest-profile building projects, Pierse was more recently involved in the construction of motorway service stations on the M1 at Castlebellingham in Co Louth and at Lusk in Co Dublin, and on the M4 at Enfield, Co Meath.

Alongside the retailer Applegreen and Top Oil, it was part of the SuperStop consortium, which was awarded a public-private partnership contract by the National Roads Authority to operate and maintain the service areas. The consortium has invested €70 million in the sites.

Other notable projects include East Point Business Park, the Earlsfort Centre, AL Goodbody’s corporate offices, Carton House Hotel and O2 corporate offices.

In June 2009, two British subsidiaries of the building group went into liquidation, one of them voluntarily. At this time, managing director Nobby O’Reilly told The Irish Timesthat Pierse in Ireland was the biggest creditor of one of the two British arms, but that Pierse’s Irish operation continued to trade profitably.

Yesterday, Mr O’Reilly reiterated that the contracting business was trading profitably and that it was its cashflow problems that forced it to seek court protection from creditors.