THE MINISTER for Finance has secured a court order directing Irish Life & Permanent to take steps to achieve the speedy and orderly sale of Irish Life as part of efforts to recapitalise the company by €4 billion.
The president of the High Court, Mr Justice Nicholas Kearns, yesterday granted the Minister’s application, made under emergency banking legislation, the Credit Institutions Stabilisation Act, for the direction order.
The decision to seek the order was linked to concerns that senior bondholders could characterise the sale of Irish Life – which represents about two-thirds of the business – as an event of default.
The order safeguards the company’s plans to sell Irish Life, which is estimated to raise €1.5 billion towards the recapitalisation.
A senior Department of Finance official said in an affidavit that the Minister had considered the direction order was necessary to protect the company in circumstances where lawyers in the UK had advised there was a real risk bondholders could argue the preparatory steps required to implement the Irish Life sale may trigger events of default under senior bonds issued by IL&P.
IL&P has about €1 billion outstanding under senior bonds guaranteed by the Minister under a particular scheme.
Mr Justice Kearns said he had received the legal documents at 8am yesterday, and noted the overall intention of selling Irish Life was to stabilise and reorganise IL&P. The position of depositors would not be adversely affected by the sale, the court heard.
IL&P had consented to the direction order being made, said David Barniville SC, for the Minister.
The order requires IL&P to take steps as soon as practicable, and no later than October 2011, to offer Irish Life for sale either through an initial public offering or a private sale.
Mr Barniville said the background to the application was the “precarious” financial position of IL&P, which was reliant on support from the State and the European Central Bank.
He said the market needed to be tested to see whether a public offering or private sale of Irish Life was best.
The purpose of the directions order was to see the Irish Life sale occurred in “a quick and orderly manner” and in accordance with specific timelines.
He said the order was also needed to ensure critical early steps in the restructuring plan were carried out quickly without any possible risk it might be alleged an event of default had occurred under ILP’s senior debt instruments.
The court had to be satisfied there was material before the Minister to support his opinion there was a reasonable basis for the direction order sought here, counsel said.
There was such material, and the Minister had also consulted with the Central Bank governor as required.
The governor had on June 7th stated he was satisfied the direction order was necessary.
The Minister’s application was heard in public and grounded on an affidavit of William Beausang, an assistant secretary general in the department. Parts of the affidavit were redacted on grounds that those sections contained commercially sensitive information.
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