INSIDE THE WORLD OF BUSINESS:IT WAS the one crack of light in the overcast financial skies that broke through the gloom at the Commercial Court.
Amid case after case of multimillion euro claims arising from the property market collapse, Mr Justice Peter Kelly heard an application from pharmaceutical firm Warner Chilcott to move its tax base to Ireland from Bermuda.
While banks are having to raise their capital levels, pharmaceutical companies are clearly not suffering the same pain. This company, Warner Chilcott, sought an order to reduce its share capital from $3.9 billion (€2.6 billion) as part of its relocation to Ireland.
The judge noted that the application involved another “Bermuda refugee”, to which counsel for the company replied that this was “a wealthy refugee” seeking asylum.
The judge noted that there was a similar application from another company later in the afternoon.
Warner Chilcott, described as a women’s healthcare and dermatology company, employs 1,115 people. The company was acquired by Galen, the pharmaceutical company set up by Northern Irish businessman Allen McClay.
Following a ruling by the Supreme Court of Bermuda, the case has been listed in court to relocate its base to Ireland for tax purposes. The company is following the likes of insurer Willis Group, Ingersoll-Rand and Covidien in seeking tax asylum in Ireland.
Meanwhile, Mr Justice Kelly’s views on the property market in one of many related cases will pique the interest of officials setting up the National Asset Management Agency (Nama).
The judge said he was dealing “on a daily basis” with cases where property values have dropped by between 70 and 80 per cent.
Nama is valuing bank loans at a current market value of €47 billion based on property falls of, on average, 50 per cent and it will then pay €54 billion to cover the “long-term economic value”.
Officials may consider the cases before Mr Justice Kelly when assessing the value of those loans.
House prices
The analysis of the Irish property market proffered yesterday by Fitch, the credit rating agency, is not going to cheer up any householders, never mind estate agents.
What makes Fitch’s predictions stand out is that, rather than predict where things are going from current trends in house prices, they have instead asked where should house prices be if the relationship between average prices and average incomes returns to something approaching normal. It’s a variation on the old adage that, if a Garda marries a nurse they should be able to buy an average house in Dublin with a standard 20-year mortgage.
Based on this analysis – which assumes house prices revert to 5.5 times average incomes from 7.5 – house prices will have to fall 45 per cent from the peak. And while there may be anecdotal evidence that some prices have fallen by close to this amount Fitch believes it will take at least another 18 months before this point is reached.
The reasoning is again grounded in commonsense rather the claims of increasingly desperate estate agents. The housing market will not bottom until unemployment stabilises and that will not happen until well into 2011, believe Fitch.
Carbon disclosure
The most interesting thing about the first Ireland Report of the Carbon Disclosure Project is the appendix detailing which of the 44 companies asked to participate did not bother.
Only 14 filled in the questionnaire while a number of others provided some information.
Those that did not bother included Ryanair, which does not come as any great surprise given its attitude to such things. They simply did not write back.
More surprising is the number of companies that, in the normal way, would be keen to present themselves as model corporate citizens that did not participate.
They include food companies Glanbia, Kerry Group, Fyffes, Total Produce and Greencore. www.cdproject.net
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Today
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