Siteserv: Denis O’Brien sale ‘great escape’ for State

Millington made best offer, says corporate financier Walter Hobbs

Denis O’Brien, whose company Millington was the successful bidder in the sale of Siteserv in 2012. There were eight bids lodged for the company early in that year. Photograph: Dara Mac Donaill

Denis O’Brien, whose company Millington was the successful bidder in the sale of Siteserv in 2012. There were eight bids lodged for the company early in that year. Photograph: Dara Mac Donaill

 

Financier Walter Hobbs, appointed by the Irish Bank Resolution Corporation to represent it in the Siteserv sale, has defended his role in the process.

Mr Hobbs, who owns Virgo Capital, described the sale process as “very hands on”.

“Whatever IBRC paid me wasn’t enough,” he added. “The task was enormously challenging.”

Mr Hobbs said he was brought on board in autumn 2011, and the sale process ran until April the following year.

“I supervised the process. It was run by senior management from Siteserv, some of its non-executive directors and people from KPMG and Davy.”

Mr Hobbs said he listened in on “every conference call” regarding the sale. He maintained that there were “no votes” over which buyer should be chosen. “Everything was done by consensus,” he said.

He said the sale team regularly reported back to IBRC, while, parallel to this, he also sent individual reports as the bank’s representative.

“Our communications with IBRC were very high. Any significant approval that was required went to the bank’s board.”

Mr Hobbs maintained that, although he personally reported to a “line manager” in IBRC, some reports were “brought up the line to the chairman [Alan Dukes]”.

Mr Hobbs said he recommended to IBRC that the €45 million offer from Denis O’Brien’s Millington be accepted. “I have been buying and selling companies for 25 years, and in my opinion, it was the best offer.”

One of the most controversial aspects of the deal was a €5 million payment to Siteserv’s shareholders to get them to approve the deal at an extraordinary general meeting.

“The thing had to be put through an egm. There was no other way. There was disgruntled shareholders in Siteserv who had lost money. They weren’t going to show up to an egm to get nothing. They wouldn’t have voted it through,” said Mr Hobbs.

Other criticisms include that the company could have been sold via an examinership or receivership, cutting the shareholders out. Mr Hobbs argued that would have “destroyed” the company and a “controlled sale” was the best option.

“There was a significant backlash from creditors. Credit lines were being closed off. Our liquidity was squeezed and you have to make a judgment how to manage that risk.”

The eight bids for Siteserv were lodged early in 2012. “O’Brien’s bid was three pages long, very straightforward. The other bids were hugely complex, and I knew their price would be lower by the time we got to the end. Selling it to Millington was a great escape for the State.”

Altrad, a French would-be bidder that claimed afterwards it would have paid more than €60 million, wanted eight weeks to conduct due diligence, Mr Hobbs said. “We didn’t have the liquidity to last that long.”

Anchorage Capital, which bid higher than Mr O’Brien, had “too many conditions” attached, which would have reduced the final payout, he said.