SEÁN QUINN would remain as chairman of his overall business group under the plan proposed by Anglo Irish Bank as an alternative to the Financial Regulator’s application for formal administration of Quinn Insurance next Monday.
The bank will outline to the regulator at a meeting today the impact of the State-owned lender’s plan to rescue the beleaguered insurer by taking control of the wider Quinn Group and restructuring debts totalling €4 billion.
Anglo has proposed leaving the Quinn family with shares in the group under the restructuring plan and may take warrants or options to acquire outright ownership of the Quinn Group should certain conditions not be met.
Mr Quinn would remain on as chairman of the group but would effectively cede day-to-day control of Quinn Insurance to a new management team installed by Anglo.
It is understood that Anglo has also proposed to indemnify the subsidiaries of the insurance company against guarantees covering debts of €1.2 billion owing to bondholders and a syndicate of other banks by the wider Quinn Group.
This could involve the bank taking an indemnity of €448 million to raise the solvency levels to the threshold set down by the regulator for insurance companies.
The regulator’s discovery of guarantees provided by eight subsidiaries of Quinn Insurance on March 24th led to its application to the High Court to appoint provisional administrators to the firm.
The bank has also proposed taking over the group’s €1.2 billion in loans to bondholders and other lenders, essentially swapping corporate for sovereign or State-guaranteed debt, while seeking to negotiate a reduction on these loans.
The bondholders are understood to be resisting any reduction in their debt. Discussions between Anglo, the bondholders and other lenders to the group and senior Quinn executives are continuing.
Anglo’s ambitious plan – proposed to secure repayment of €2.8 billion in loans owing by the Quinn family provided primarily to meet the family’s losses on their shares in the bank – has met a cool response from the regulator.
The new management team at the bank outlined its initial proposals to the regulator on Tuesday and will meet the regulator today to outline the effect of the possible indemnities, warrants and debts that it has proposed taking on.
The regulator is understood to have expressed concerns about the credibility of Anglo, which itself has received €12.3 billion in State injections, leading a restructuring of the wider Quinn Group.
The continued involvement of Mr Quinn as chairman of a group containing Quinn Insurance and the family’s continued ownership of the insurer would also be a cause of concern for the regulator following the past breaches of the regulatory solvency requirements.
It has emerged that the impact of the guarantees provided by Quinn Insurance subsidiaries over the wider Quinn Group’s debts were not included in the quarterly solvency returns to the regulator or in accounts for the insurer.
The guarantees were referred to in a brief note in accounts for one of the subsidiaries which is not monitored by the regulator.
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