The Government has postponed the sale of real estate in Russia and Ukraine that belonged to the family of former billionaire Seán Quinn, due to a severe slump in these countries' property markets.
The State has also agreed to acquire a stake in recovered Quinn family assets and cash from A1, a Russian firm with which the Irish Bank Resolution Corporation (IBRC) formed a joint venture to secure control of property owned by Ireland's one-time richest man.
Russia’s economy is suffering due to a sharp fall in world oil prices and Western sanctions imposed over its support for separatists in Ukraine; the conflict in eastern Ukraine, meanwhile, has caused massive damage to that country’s finances.
A1 said the current estimated value of recovered Quinn family assets was not more than $120 million (€109.5 million), down from about $200 million (€182.5 million) in 2013.
“Hence it has been decided by the special liquidators and A1 to revise the joint venture agreement and that the assets will be held for later sale as and when the macroeconomic backdrop improves,” A1 said in a statement on Tuesday.
The Moscow-based firm said the revised deal, which was signed on Monday, would also "facilitate the acquisition by IBRC of A1's economic interest in recovered Russian and Ukrainian Quinn International Property Group assets".
“Under the new agreement, A1 will sell shares which derive their value from an economic interest in the recovered assets and associated cash reserves and future rental income, together with recovery claims and recovery proceeds, for a payment of $34 million (€31 million) and a continuing opportunity to benefit from 20 per cent of the value of any further assets recovered over the next six months.”
The company, which is part of the sprawling Alfa Group controlled by Russian billionaire Mikhail Fridman, said the sum was similar to that which it would have received under the terms of the original April 2013 deal with IBRC.
Property prices in both Russia and Ukraine were considerably higher then, however.
When the joint venture was created, Mr Quinn’s real estate in Russia and Ukraine was estimated to be worth some €500 million.
Properties reclaimed for the State and A1 so far include a skyscraper in Moscow, a major logistics centre in the provincial Russian city of Kazan, and a large shopping centre in Kiev; the Kazan property has twice failed to attract bidders at auction.
Eight assets remain to be secured, A1 said.
"A1 has done an excellent job of securing these assets where all prior efforts of the Bank had failed," said Kieran Wallace, the special liquidator for IBRC – which used to be Anglo Irish Bank.
“The revision of the joint venture agreement makes commercial sense at this juncture as it is in the best interests of the State that these assets are not sold now at seriously depressed prices,” Mr Wallace added.
“We will continue to benefit from the income generated from the secured assets and to work hard to recover more assets which are the legitimate property of the Irish State.”
Ireland’s ambassador to Russia, Eoin O’Leary said the joint venture had achieved “serious success . . . in recognising the rights to all key real estate assets in both Russia and Ukraine that were illegally withdrawn from the appropriate owners and lenders.”
Mr Quinn’s family is now locked in a bitter legal dispute with IBRC over liability for €2.34 billion in loans that Anglo Irish Bank made to Quinn companies.