High Noon at Westbury as INM stand-off dominates AGM

Business Week: also in the news were climbing rents, housing and Brexit flirting

INM chief executive Robert Pitt (far left) sat simmering at one end of the table at the company’s AGM, while company chairman Leslie Buckley (far right) sat at the other end of the table. Photograph: Gareth Chaney/Collins

INM chief executive Robert Pitt (far left) sat simmering at one end of the table at the company’s AGM, while company chairman Leslie Buckley (far right) sat at the other end of the table. Photograph: Gareth Chaney/Collins

 

You might have expected to see a sheriff sat at the top table of Independent News & Media (INM)’s annual general meeting this week given the furious nature of the dispute that has engulfed the company’s board over the past year.

“Walk 10 paces, turn and vote!” he might have said. The drama may not quite have lived up to John Wayne’s standards, but as excitement and anticipation go in the world of corporate governance, the events at the Westbury Hotel were pretty much as good as it gets.

INM chief executive Robert Pitt sat simmering at one end of the table, while company chairman and Denis O’Brien associate Leslie Buckley eyed him coldly from the other. In the end, Pitt didn’t flinch, declining to vote for Buckley’s re-election to the board.

It was an unprecedented development for a publicly listed company in the Republic, dating back to last year when Pitt and Buckley clashed over how much to pay for Newstalk, a radio station owned by Denis O’Brien’s Communicorp.

Communicorp and INM sought separate valuations for the station, and, when Buckley wanted to go with the higher option obtained by Communicorp, Pitt made a complaint to the board as well as the State’s corporate watchdog under whistleblower legislation.

An external review of the boardroom spat made no definitive finding on the central issues involved because of major differences between Buckley’s submission and those of the company’s most senior executives, it is understood.

Analysts have warned that INM’s share price is being held back by all this, and perhaps that has something to do with why Dutch hedge fund manager Bram Cornelisse is stake-building in the company.

Farringdon Capital, which is owned by former Merrill Lynch executive Cornelisse, has boosted its share to almost 6.5 per cent of the publisher, up from 5.2 per cent. The biggest shareholders remain O’Brien, who owns almost 30 per cent, and Dermot Desmond, with close to 15 per cent.

Before the AGM, INM announced that its pretax profit fell by almost 20 per cent during the first half of 2017 compared with the same period last year.

One shareholder at the meeting helpfully suggested the board was too “unhappy” and quipped they should “appoint a clown”. Surely there must be one or two floating around Independent House.

Dublin and Frankfurt duel for banks seeking EU hubs

The mating dance between European Union cities and the United Kingdom’s wantaway financial institutions continued this week, with Frankfurt and Dublin said to be drawing the bulk of the wandering eyes.

Bundesbank board member Andreas Dombret told Germany’s Der Spiegel magazine that 20 big financial institutions are in negotiations to shift their operations to the banks of the river Main in Frankfurt.

“We are in the decisive phase of location decisions . . . and it is clear that Dublin and Frankfurt are profiting particularly,” he said. “Above all, the big American banks are concentrating themselves on these two cities.”

For one, Toronto-Dominion Bank, Canada’s largest lender by assets, became the latest to choose Ireland as its post-Brexit European hub. The announcement came during Taoiseach Leo Varadkar’s visit to Canada.

Bank of America, however, was said to be divided over where their EU hub should be. The US bank, which already has an operation in Dublin, previously indicated the city is its “preferred location” for its main legal entities in the EU.

For all the talk of an influx, some will have been surprised to read that demand for office space in Dublin 2 – one of the city’s core business districts – is not what might be expected.

The district has a commercial vacancy rate of more than 18 per cent, significantly above the national average, according to new research by property database GeoDirectory and DKM Economic Consultants.

The company’s chief executive Dara Keogh said many financial institutions had large space requirements, which did not fit the specifications of what was available.

Of course, companies on this side of the Irish Sea are also dealing with the Brexit fallout. However, in better news, it emerged that nearly half of Enterprise Ireland-supported construction firms have reduced their exposure to the UK.

Some 70 per cent are said to be eyeing up opportunities in mainland Europe, according to a new survey, as the collapse in sterling against the euro has eroded the competitiveness of Irish exports.

Housing crisis bites

Brexit is one thing, but it can sometimes feel like the State is still punch drunk from the last crisis. US vulture fund Cerberus is stepping up enforcement action against buy-to-let and residential mortgages.

Since 2014, Cerberus has bought loans with a face value of €20 billion from institutions such as the National Asset Management Agency, Ulster Bank and Royal Bank of Scotland, giving it the right to seek repayment of the debts.

So far this year, companies connected to the fund have begun 77 cases in the High Court, many of them against individuals or couples.

Indeed, the rental and housing crises seem to get worse by the week. The latest Daft rental report laid bare the lack of supply in the market.

Despite rent levels now in excess of Celtic Tiger peaks, fewer than 3,000 properties are available for rent nationwide. That’s the lowest number since Daft started keeping records in 2006, and the main reason rents are rising by almost 12 per cent nationally.

Web Summit founder Paddy Cosgrave said he had a six bedroom “crash pad” for new employees arriving in Dublin as part of efforts to circumvent the crisis.

“It at least gives them about four weeks where they don’t have to worry about trying to negotiate somewhere to rent,” he said. “I’ve no doubt other companies are doing something similar as well. It’s quite a challenging climate.”

Builders, meanwhile, have called on the Government to set up a fund that will allow small companies in the industry to borrow cash to build homes.

The Construction Industry Federation said there were many companies outside the capital too small to attract the investors that were backing bigger players or to access other sources of State funding.

Another legacy of the crash is how the landscape of the workforce has changed. Many young people now rely more heavily on what’s known as the “gig economy”, which encompasses jobs with companies such as Deliveroo.

According to the Central Bank, these are the “nonemployed” – and a high number of them in the Irish economy may be one reason behind the stagnation of earnings.

The regulator has created a new measure, the nonemployment index, to track “discouraged workers, passive job-seekers and underemployed workers – individuals who are working part time but would like to work more hours”.

It figures there are 888,708 Irish people of working age – 15-64 – who fall into this category.

Dramas at two landmark cinemas

Finally, put the popcorn away.

Two of the State’s landmark cinemas are in a spot of bother, as Cineworld on Parnell Street in Dublin looks set to be downsized, while Eye Cinema in Galway City has entered examinership.

High-profile developer Gerry Barrett has had a rough week, dealing with receivers at both the Eye Cinema and his adjoining G Hotel, just a short drive from Eyre Square.

Separately, Siptu members working in the Cineworld complex are to ballot for industrial action after the company confirmed there would be job losses at the cinema.

The UK-based cinema operator, which operates facilities in nine states, said changes were being carried out at its Dublin complex following an assessment of capacity there.

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