Sir, – Some people seem to think that the State actually profited to the tune of €40 million from the sale of Siteserv. One of the arguments goes that the loans bought by the state had no significant commercial value with no prospect of being repaid.
In other words, we bought junk. Siteserv may have had difficulties but it was certainly far from junk status. But, it helps to strengthen the argument and convince a non-sceptical audience that something wonderful happened with this sale.
I am a maths teacher teaching financial maths to Leaving Certificate students as part of the new Project Maths course. Say if I presented them with the following problem – the State purchases the loan book of Anglo-Irish, which includes an outstanding loan of €150 million owed by a company called Siteserv. If the company is sold for €45 million, with €5 million of the sale price being paid to the shareholders of Siteserv, what is the loss/gain of the sale to the State?
Answer: The loss to the State is €110 million.
What price would the state need to sell Siteserv to yield a profit of €40 million?
Answer: €190 million. – Your, etc,
KIERAN MILLS
Dublin 16.