Lenders to Seán Quinn’s embattled Quinn Group, including State-owned Anglo Irish Bank, will seek an urgent meeting with the Financial Regulator over the coming days in a bid to restructure the business and protect loans totalling €4 billion.
Anglo and the other lenders will try to press for an alternative solution with the regulator to avoid the confirmation of administrators to Quinn Insurance at a crunch High Court hearing next Monday.
Mr Quinn described the regulator’s action to seek the appointment of provisional administrators to the owner of Quinn Direct as “one of the biggest errors in the history of corporate Ireland”. The group has said that the move will prevent the Quinn family from repaying the €2.8 billion they owe to Anglo and threaten 5,500 jobs at the overall business.
The State-owned bank and a group of bondholders and other banks, which are owed an additional €1.2 billion, fear that the administration of the profitable Quinn Insurance could destroy the value of its parent, the Quinn Group.
High-level discussions between the group’s senior executives and the lenders continued yesterday as the parties sought to devise an alternative to avoid full administration.
The regulator is understood to be open to considering a meeting with the parties ahead of the court hearing, pending legal advice.
A spokeswoman for the regulator declined to comment ahead of the full hearing on its administration application next Monday.
Taoiseach Brian Cowen said yesterday he was focused on finding a solution to the difficulties faced by the group “to bring matters forward”. “Obviously, we have to respect everyone’s function here and from my point of view it is to look at the employment situation and see in what way we can try and find a solution,” he said.
Mr Cowen has asked Enterprise Ireland to meet the Quinn Group to see if it can find a solution.
The Taoiseach confirmed he spoke with Mr Quinn last Thursday night “at Mr Quinn’s request” and that during the conversation, Mr Quinn “reiterated directly” the points he made earlier on television about the threat to the group.
The High Court appointed joint provisional administrators to Quinn Insurance last Tuesday after the regulator expressed serious concerns about the firm’s ability to meet liabilities covering the policyholders.
The regulator was also concerned at how the insurer was conducting its affairs after it discovered that guarantees provided by subsidiaries on debts of the wider Quinn Group had reduced its assets, pushing it below the regulator’s solvency threshold for how much insurers must hold.
Intense discussions between Quinn executives and their lenders will continue this week as they plan a major restructuring to put the group and the insurer on a secure commercial footing. The Quinn Group and Anglo had no comment on the talks.
Among the proposals being considered is that State-owned Anglo would take majority control of the group and attempt to restore the insurer’s solvency levels. Swapping debt for shares in the group, which would give a stake to Anglo and the other Quinn lenders, led by UK bank Barclays, is also under consideration.
However, the more likely option is that Mr Quinn would be forced to cede control of the group he established 36 years ago, and that Anglo would bring in outside consultants to help manage the insurer following the group’s restructuring.
Changing ownership – giving control to the Anglo or the Quinn bondholders and other lenders – may be a temporary option considered to restore the insurer to financial health before selling it on to a buyer.
Sources said the lenders recognised that any solution must not just restore the insurer’s solvency levels and remove the guarantees but also address the regulator’s concerns about corporate governance.
The insurer is still being investigated by the regulator, sources stressed. The new head of financial institutions supervision, Jonathan McMahon, formerly at the UK regulator, is spearheading the inquiry, reporting to the head of financial regulation, Matthew Elderfield.