Denis O Brien gets snout in IBRC Trough

2Pack · **Joined:** May 3, 2007 **Posts:** 10511

Siteserv which owes €150m to Anglo is for sale ....to Denis O Brien for €45m and a debt writedown of the rest of the money. So the taxpayer gets around €40m coz the shareholders or directors will cream off €5m for themselves first.

http://www.irishtimes.com/newspaper/fro ... 33936.html

It is NOT for sale to Altrad of France for €60m . which should increase the taxpayers take by 37.5% to €55m

IBRC do not appear to have any view on what is best for the taxpayer in this case. Why??

http://www.irishtimes.com/newspaper/fin ... 71785.html

Quote:

BUSINESS SUPPORT firm Siteserv has been sold to businessman Denis O’Brien for €45.42 million in cash. Shareholders in Siteserv are set to make a premium on the deal, but lender Irish Bank Resolution Corporation (IBRC) will take a hefty writedown on the debt it is owed.

As part of the deal, IBRC (formerly Anglo Irish Bank) has agreed to take a haircut of more than 70 per cent on the € 150 million in outstanding debt it is owed by Siteserv, which is listed on the secondary markets of Dublin and London and employs some 2,300.

Without this agreement, “the proposed disposal would not be capable of implementation and it is likely that shareholders would not have realised any return on their investment”, said Siteserv.

While IBRC declined to comment on the transaction, it is understood that a sale was seen as the best alternative to the bank versus other options for getting some return back on its loan.

Shareholders, including chief executive Brian Harvey, Chris Neate and John Neal, will receive €4.96 million, or €3.92 per share. This represents a premium of 96 per cent on Thursday’s share price, or a premium of 26.9 per cent based on the average price of Siteserv over 12 months.

grumpy · **Joined:** Jun 9, 2008 **Posts:** 5062

Quote:

Shareholders in Siteserv are set to make a premium on the deal, but lender Irish Bank Resolution Corporation (IBRC) will take a hefty writedown on the debt it is owed

Does not compute. At fucking all.

BlameGame · **Joined:** Jun 21, 2010 **Posts:** 2939

Very interesting
Their accounts to April 2011 are here http://www.siteserv.ie/investors.html

Operating Profit 8,261k
Interest Costs (8,130k)
Profit before tax 131k
Interest bearing loans 147,764k

So a company that is trading profitably, paying all its interest on its debt pile, manages to strong arm its bankers into a HUGE debt write down?

There were trade creditors and other payables of 77,980 THEN. Must be nearer 100 million now. And they get paid in full? And the bank takes the write down.

Another win for Anglo.
Could do with a parliamentary question I think.

thewatcher · **Joined:** Nov 8, 2006 **Posts:** 490

You just pay your household charge and don't be worrying yourself about extremely complex issues like this.....

ex-Patrick · **Posted:** Mon Apr 02, 2012 10:01 am

BlameGame wrote:

So a company that is trading profitably, paying all its interest on its debt pile, manages to strong arm its bankers into a HUGE debt write down?

Manages to strong arm its bankers into a huge debt write down AND a 5 million payout for the principals...

Spinnaker · **Joined:** Mar 1, 2010 **Posts:** 1192

BlameGame wrote:

Could do with a parliamentary question I think.

Sorted

dipole · **Joined:** Dec 28, 2006 **Posts:** 2675

http://www.irishtimes.com/newspaper/bre ... king8.html

Of course they'd approve it.

Can anyone outline the probable thought process of those within Anglo who approved this?

Writing off about 100million loan for a company which is performing and saleable seems like poor banking sense to me but I know nothing about this.

grumpy · **Joined:** Jun 9, 2008 **Posts:** 5062

Nice to see the directors increased their pay in 2011 over 2010 by 100k in total, with 5 execs and one non-exec getting 1.2M between them. And also nice to see the chief exec Brian Harvey will be getting 16% of the 5M allocated to shareholders. Nice all round. Thursday nice.

Fooled by randomness · **Posted:** Thu Apr 05, 2012 4:22 pm

Very obvious sweetheart deal for incumbent mgt. Altrad would have paid more but then how would mgt get rich after buggering up the balance sheet ?

Dukes and Aynsley deserve a grilling for this one

BlameGame · **Joined:** Jun 21, 2010 **Posts:** 2939

dipole wrote:

Can anyone outline the probable thought process of those within Anglo who approved this?

Writing off about 100million loan for a company which is performing and saleable seems like poor banking sense to me but I know nothing about this.

Off the top of my head:
We can't put this in receivership because it will destroy "enterprise value"
We can't put this in receivership because it will lead to termination of contracts and thus destroy "enterprise value"
We can't decapitate existing management because its vital to sew them up in a non-compete clause or they'll set up again and take all the contacts with them.

Its a huge call. And an Aynsely call. He can't hide behind an underling on this. If he isn't hired to make the right call on this sort of stuff, then what the f**k is he for?

What I really want to know is did anyone leak out what the banks internal provisioning against this loan was? :nin

Because the way Irish bankers think is so small minded as long as they're "fully provided" they don't mind a big loss, but even if a situation is terrible they won't realise a loss until they've "got their provisions right"

2Pack · **Joined:** May 3, 2007 **Posts:** 10511

Aynsley is not fully provided, the TAXPAYER is.

Any chance we can send this to the IMF for a look see ??

Fooled by randomness · **Posted:** Thu Apr 05, 2012 6:04 pm

2Pack wrote:

Aynsley is not fully provided, the TAXPAYER is.

Any chance we can send this to the IMF for a look see ??

Pearse Doherty is the man for this. Or Shane Ross if you're that way inclined.

BlameGame · **Joined:** Jun 21, 2010 **Posts:** 2939

I wonder would KPMG and Davy be on the hook here. Their sales exercise and valuation etc is called into question by this.

dipole · **Joined:** Dec 28, 2006 **Posts:** 2675

This is where moral hazard kicks in.
Every highly leveraged company which has been bank-rolled by Anglo are now going to be looking at the state of play.
Why would you pay off your debt when you can just get it forgiven.
Issue more shares, dilute your ownership to clear you debts? Nah.
cut directors salaries and fire current directors who got the company in over it's head? Nah.
Lets just bluff our bank and get our debt forgiven.

....and we have the f*cker O'Brien right in the thick of it all too.

More time has been spent on this site discussing debt-forgiveness for mortgagees than on this corporate debt forgiveness. How many mortgages would you have to forgive to get to these sorts of euro numbers? 5000 houses? 8000 houses?

Shane Ross, Pearse Doherty. All they are good for is for pointing out how the Irish have been swindled once again. They cry out after the horse has bolted. they have no more power to prevent anything than the man in the street. There is something fundamentally wrong with the way official Ireland works and I don't see it ever being fixed.

grumpy · **Joined:** Jun 9, 2008 **Posts:** 5062

The EBITDA is 15M, O'Briens offer was 3. Thats kind of low on the current 4 to 6 times view. There was always going to be a huge writedown by anglo which at 107m almost exactly matches the goodwill of 100m. Say four times (the alternative offer) and the equity gets wiped (and yes Blamegame is right about the effect of a receivership on a business but people have learned since the Kieran Wallace Superquinn fiasco), and Anglo get 20M more. So 5 to 20M is what Anglo gave away here. Not a lot in the Anglo book, but look after the millions and the billions will take care of themselves.

Denis O Brien gets snout in IBRC Trough

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