“Other than to seek clarifications on certain matters, NAMA has not engaged in negotiations with the two potential investors.. We understand NAMA has said only that the offers made by the two potential investors did not meet commercial requirements but did not outline what those commercial requirements were. We find this course of action impossible to understand” Treasury spokesperson speaking on 26th January, 2012
It was reported by the Sunday Independent in January that Treasury was “understood” to have formally warned NAMA via a solicitor’s letter to stop putting out inaccurate information about Treasury. Looking at the NAMA affidavits in the ongoing court battle in Dublin’s High Court, it looks though as if it was NAMA that wasn’t being portrayed in the most accurate of terms. There are four NAMA affidavits available, two from Mary Birmingham, dated 3rd February and dated 13th February and two more from John Moriarty, also dated 3rd February and 13th February. The affidavits would seem to belie claims that NAMA had not engaged with two third party investors – more correctly termed “buyers” in this instance, Hines and Macquarie – who were interested in buying Treasury’s loans from NAMA.
The affidavits also provide NAMA with its first real opportunity to have a swing at Treasury and there is some biting stuff in the affidavits though these two quotations might sum up the NAMA position – “the Applicant’s affidavits are replete with mischaracterisations and incomplete accounts of what has occurred since NAMA’s acquisitions of their bank loans” and “in seeking to lay the blame at NAMA’s door for such detriment the Applicants overlook the commercial reality that the loan facilities which have been demanded are in default and have been, in many cases for some time”
The Offers
The affidavits from the two NAMA staff show that the Agency formed specific teams to work with the two proposals, and that furthermore PwC Corporate Finance was engaged to provide a third party view of proposals. In the case of the Hines proposal, NAMA says it formed a team comprising four NAMA employees, John Moriarty, a senior NAMA portfolio manager, John Collison and Graham O’Hanlon from the NAMA credit department and Simon Lynch from the NAMA legal department. In the case of both offers, NAMA engaged PwC Corporate Finance as an independent third party to assist in its evaluation of the offers. NAMA seems not to be a stranger to weekend work, and the Hines offer was reviewed by the NAMA team on the weekend of 21st and 22nd January, 2012. The proposals seem to have been delivered late in the day and were heavily qualified, lacked detail and in the case of Hines wanted NAMA to put up 80% of the purchase price PLUS agree to provide development finance. The affidavits show that NAMA was seemingly seriously engaged with the offers, working weekends, and in the case of PwC into the night, to examine the proposals. And it seems that Hines criticised Treasury for not responding to queries in a wholehearted manner and demanding unreasonably high fees for engaging with the loans if purchased from NAMA. The Hines offer was also non-recourse to the portfolio of assets, and Hines wanted the purchase price to be apportioned to specific assets, with the loan and asset ringfenced without recourse to other assets.
The NAMA team which dealt with the Macquarie proposal was Mary Birmingham, Darren Cullen, Stephen Coffey (all from the NAMA portfolio management department) and Alan Stewart (NAMA legal department) but it seems that others including NAMA credit, Ronnie Hanna included as well as John Mulcahy himself and the PwC Corporate Finance team all participated in examining the proposal. TheMacquarie proposal does indeed carry a headline €622m but that includes €52m consideration for KBC’s loans.Macquarie was to put up €73m of “equity” with the implication that NAMA would staple finance the remainder (€549m or 88%). There would be no cross-collateralisation, as with the Hines proposal, so if one loan failed, then NAMA couldn’t seek recourse against another asset. Macquarie wanted a margin of 12% on any additional funding required, presumably to finish off developments.Macquarie would be paying management fees of €6m per annum to Treasury PLUS €80m!
The CIM – “CIM” being the US property investment and management group – offer in September 2010 was even more hairy for NAMA as it was for a total of €805m, but of this NAMA was to provide 90% staple financing totalling €724m and CIM would put up €81m itself. That said, it seems the offer was acceptable to the NAMA board in March 2010 BUT subject to certain conditions which included a reversal of an asset transfer by Messrs Barrett and Ronan. However it was the fact, say NAMA, that a further revised offer, which was less than €625m – €180m less than the original offer – was submitted by CIM in May 2011 which took account of matters uncovered with due diligence and also the uncertainty introduced with the new Government’s commitment on Upward Only Rent Reviews and NAMA rejected the revised and lower offer.
Treasury’s financial health
For the first time, we get NAMA’s assessment of Treasury’s financial health, or rather ill-health. NAMA says it acquired €1.7bn of Group loans at par value. It says that the Group also owes €1bn to non-NAMA banks. So that’s €2.7bn of debt, it seems. The Group’s financial statements at 28th February 2010 show it to be “balance sheet” insolvent to the tune of €859m. NAMA has provided €103m of new advances to the Group. In July 2011 Treasury said that it was going to run out of cash by September 2011.
NAMA advanced an additional €103m to Treasury including €30m to fund the Montevetro office building which was eventually sold to Google. It is intimated –para 47 of Birmingham affidavit 3rd February – that NAMA provided €75m of staple financing to Google on the Montevetro building which was sold for €99.9m in February 2011.
Unfortunately for the Irish taxpayer Treasury look like a basket case.
Bigger more important question is why the f**k it cost,an additional 100,000,000 to the irish taxpayer figure this out?All,they had to do was read NWL…..So NAMA advanced over a HUNDRED MILLION,did they enhance the security,say have the China domiciled Richard sign something !!!!
Expensive education at NAMA,courtesy of Irish Taxoayer,can they not read ?
@John, yes reading the NAMA affidavits, and remembering you are seeing events from NAMA’s point of view, the patience shown to Treasury does seem extraordinary. With respect to the €103m, it is stated in one of the affidavits that €30m related to Montevetro which was ultimately sold for €99.9m to Google in February 2011, so I guess that was probably a good funding decision. It is implied elsewhere that some went to Central Park which has seen positive developments in rents apparently. But how much was sunk into Battersea and other developments, that might never be recovered? We don’t know from the affidavits.
Excellent reading here in these affidavits thanks for posting!
@NWL “mont” was a JV how much was “fees” to Tresuary,they clipped 16,000,000 from REO in last report,did they enhance the security is biggest question,blanket complete all in personal guarantees from BOTH partners,if not the people responsible should be fired or resign in disgrace,100,000,000 who signed off on it?
The country broke,selling state assets and NAMA advances 100,0000,000 to a hopelesly completly broke,insolvent company.
@John, I see that the Macquarie proposal included a €6m annual fee payable to Treasury every year for seven years PLUS €80m – unfortunately the €80m isn’t described but crikey what a potential reward. We mightn’t have the full detail of the Macquarie proposal but 90% staple financing, paying Macquarie a 12% margin on any lending by it, €6m per annum management fees and €80m to Treasury and the ringfencing of loans to assets. Somehow “reject” doesn’t seem like the right term to use in responding to that offer!
It’s such a derirosy ‘offer’ pitiful actually,what a sad reflection on the two founders.Not worthy of comment.
Woah!
Will be a long while trying to get my head around that last paragraph.
Where does NAMA get €103m to give to anyone? Is it not full of bad debt on overvalued real estate? Is it borrowing (from where) to give bust developers some working capital?
If it is a glorified ‘bookeeping exercise’ then what is the net balance effect on the debt in question?
Then there’s the financing worth €75m to Google… is this money they have to repay, and will they be able to use it to offset against a corporation tax bill they might otherwise have to pay us at a measly rate of 12%?
@Conan, according to an interview given by the NAMA CEO Brendan McDonagh with Chinese TV on Monday – not available online yet, can’t wait to hear what the Chinese translation of “effectively” is! – NAMA has a cash mountain of €4.2bn, and this has come from the sale of property by developers who have used the proceeds to pay down loans, and also NAMA has sold some loans, eg €800m in the Maybourne hotel group was sold to the Barclay brothers last September 2011.
With respect to the €75m which it is implied in the affidavits was allocated to the Google purchase, if this is what might be called staple financing, then Google would be expected to pay this money to NAMA over a period plus interest. As a building loan, Google wouldn’t be able to claim capital allowances generally, so in general you wouldn’t expect this to in any way reduce Google’s tax exposure.
Hmm, re the Google deal… is that a glorified corporate rent-to-buy scheme?
@NWL
It looks like there is a queue of quasi banks and financiers forming up to make a complete donkey out of Ireland. Fair play to NAMA for rejecting these proposals. Its a pity they decided to spend any time or money on them.
NAMA should change it policy.
Take charge of all assets.
Finish them.
Rent them.
Do not attempt to sell, if at all possible. With the limited exceptions of genuine industrial/ service companies like Google/BSB Sky etc, the remainder are simply sharks looking for a tasty supper.
And It is our childrens supper they are looking to eat.
The deference shown to developers by Nama, still, is shocking.
They are bending over backwards to appease them.
It seems to be offering loans to possible buyers. What are the terms? No doubt they are very favorable.
I don’t accept that this is the best of all the bad options.
And why is it every time a public servant has to make a financial decision they outsource responsibility to PWC or Ernst and young or some other auditors.
It was the same story with Dublin Councils choosing a waste collector. Its a clear absconding of responsibility.
@Conan,NAMA has approved advances of almost a BILLION to developers.
After intense pressure and questions by the excellent Pearse Doherty,they reluctantly released a geographic breakdown of this,but no info on who the lucky recipients are.If NAMA,is lending non recourse while “borrowers” are engaging in shenanigans like transferring assets,they must simply must succumb to oversight on future funding.
The 100,000,000 is an absolute insult to the Irish people,simply unacceptable,no more excuses NAMA has become a joke.All they had to do was read this blog,some commentators have been screaming from the rooftops to close this fiasco down.The asset transfers were also highlighted.
JG, I probably did know this in the back of my head… where things I cannot understand about compromised governance and accounting are heaped in ever increasing piles with a transparency questionmark over them.
Do you have a link to the ‘geographic breakdown’, or where might it be found?
@CD it’s on here,NWL did great post on it,I think if you enter key word at top of page it will find it,apologies using iPhone so difficult for me.
@Conan, geographic breakdown of NAMA’s €1bn advances is here
http://namawinelake.wordpress.com/2012/02/16/nama-provides-geographical-split-of-advances-to-developers-which-might-offer-clues-as-to-why-we-have-440000-on-the-dole/
@JG
I agree with you. Pearse Doherty is the most impressive TD in the Dail. It was a joke when Enda Kenny was voted best. It is beyond belief that Treasury had any credibility. I remember reading a full page article in the Guardian at least two years ago ,about Treasury and the Battersby Power Station and in it they stated Treasury were bankrupt. Not one Irish newpaper ran the story, In fact six months later the property rag the Irish Times ran a puff piece about their planning permission in Ballymun which was going to create tens of thousands of jobs. Sad
@HR the only Irish media outlet that recognized the emperor had no clothes was the always excellent ,The Phoenix,sorry subscription only,but they exposed the fee gouging by Tresuary and asset transfers.
The only public available documents related to one of the hundreds of various vechicles,REO,if NAMA had bothered to read it they would have know the whole edifice was bullshit,smoke and mirrors.
Absolutely,unconsiable that NAMA funded this dog and pony show,which part did they not get,they better have increased the security.Did NAMA allow and encourage the payment of fees to Tresuary,the Irish Taxpayer deserves a complete breakdown and explanation of who approved the 100,000,000 and why.
@John, it’s worth reading the affidavits to see what NAMA has to say about the SP Setia offer. NAMA, according to the affidavits, expects to recover 100% of its lending on Battersea, and apparently SP Setia’s offer was only at 85%. Remember the site in Battersea is worth GBP 500m by most valuations I have seen, and NAMA is a preferred lender.
Have they cleaned up the ‘capital stack’ yet.Is controversial Aisan investor Victor still hanging around the hoop hoping for the ball to bounce his way.Speculative development in London,is dead due in no small part to a liquidity crisis.
Whats the burn rate here for pleasure owning that bunch of bricks,the acquisition loan was increased by 64,000,000 as this is a separate stand alone entity,did NAMA come clean for once,admit how much Irish Taxpayers money it’s squandered here,no chance.
@John, there was an analysis of Treasury’s REO vehicle here last summer
For a company with €1bn negative shareholder equity, Treasury Holdings vehicle REO is surprisingly upbeat in its latest financial report
http://namawinelake.wordpress.com/2011/06/23/for-a-company-with-e1bn-negative-shareholder-equity-treasury-holdings-vehicle-reo-is-surprisingly-upbeat-in-its-latest-financial-report/
You covered it extremely well,but only ‘ media ‘ outlet to best of my knowledge was,The Phoenix.
Even let me post my crazy theories once or twice!
Bill Nowlan had a half page opinion piece in the IT today on Nama. Did his son Kevin ,who is a senior executive in Nama have Treasury as a client? NWL could you put up this piece.
@Harold, you can attach links to your comments (if over three links, your comment will be held in a moderation queue). This is the Bill Nowlan article.
http://www.irishtimes.com/newspaper/finance/2012/0222/1224312162434.html
@HR we had some fun with Nolan,on here before.
Thanks for posting the affidavits, NWL.
JG
I think Bill and the family would like Nama to spend more fees. I think he is a world expert on property. He can write the book with Jack Fagan on “How we made a fortune in the boom and a bigger fortune in the crash”
NWL did another excellent piece,it’s actually quite simple according to his unintentionally hilarious blog,he has skin in the game.
http://namawinelake.wordpress.com/2011/09/28/nama-property-receiver-firm-urges-nama-not-to-sell-below-“value-range”/
Hmmmmm…..
Hmmmmmmm….!??
Ahh, now I see the problem. You see, Treasury must have gotten Nama confused for Anglo Irish Bank in 2006, and are now suing Nama for not in fact being the Fitzpatrickian loan piñata Treasury was expecting.
I wonder if the courts will find against Nama on this heinous charge? I honestly do.
Just unable to type at the moment….. can’t pick myself off the floor from laughing….. NAMA gives €100,000,000 to a developer that they say is hopelessly insolvent and ….. wait for it……. that NAMA wants to put a receiver into. Talk about “amateurs, who don’t know what they are doing and make it up as they go along” as an eminent merchant banker said to me after meeting them… Assessment fully confirmed. I have to get a Kleenex and a stiff drink before I can write any more.
Is there an Irish translation for conflict of interest….guess not.
“Ronnie Hanna included as well as John Mulcahy himself and the PwC Corporate Finance team”
“Jones Lang LaSalle have worked as joint agents for Treasury Holdings on the letting/sale of Montevetro. A comprehensive marketing and letting plan has been agreed with and prepared by the agents and we have been working closely with Jones Lang LaSalle to successfully complete the letting/sale programme. We continue to seek Jones Lang LaSalle’s input on all aspects of our marketing of this building including detailed submissions and proposals.”
- John Bruder, Treasury Holdings, 2011
http://www.joneslanglasalle.ie/Ireland/EN-IE/Pages/OfficeAgencyLeasing.aspx?TabIndex=2
@John, if there’s not a term for conflict of interest, there needs to be. It grated a little today to see that PwC advised on the proposals submitted to NAMA by Hines and Macquarie, and THEN it was PwC which benefitted from the rejection of those proposals, in the sense that PwC is one of the two receivers appointed to the Treasury Holdings’ assets. PwC will doubtless say it has Chinese Walls between financial consulting and receivership, but c’mon.
So “Mulcahy” is one of the ” dream team” that approves the 100 mil,JLW his old little shop get the leasing and sales commission,absolutly appalling.
Does Ronnie even know how to spell C R E D I T R I S K,it’s not that big a word,he signed off on the advances to Tresuary,after car crashing Ulster,resign Ronnie,do the decent thing.
“Mr Hanna has worked with Ulster Bank in a variety of roles since 1980. Most recently he has held the role of Head of Global Restructuring Group NI and prior to that head of credit risk NI within Ulster Bank”
Read more: http://www.belfasttelegraph.co.uk/business/business-news/former-ulster-bank-executive-to-play-a-key-role-in-nama-14678180.html#ixzz1n9jpu7Vh
@WSTT : I presume that NAMA will recoup €100 million given to Treasury if they get a receiver appointed to the group of company’s?
@GD, You’re winding me up…. aren’t you? :-)
I would imagine that NAMA has recouped the €30 million that it put up to finish Montevetro for Google. It is unlikely to recoup any funds that it gave Treasury to pay its interest or its overheads. I suppose that some of the rest could have gone on fitting out space that Treasury was letting, consultants, fees and service charges. We don’t have a breakdown. One would be interesting.
WSTT : I was only trying to wind you up.
This blog is very very informative especially the comments on NWL’s factual postings.
However I despair reading this particular blog. It is hard to judge decide which of the protagonists in this case appears more useless
@WSTT they took back 75 in paper,advanced 30,sold for just under 100,was there not a JV partner here ?
@NWL you were correct as usual !
It’s worse much worse,they utilized the 100 mil for capital projects,retained income instead of paying debt service.Working,my way thru the paperwork.
A set of absorbing affidavits…. I have a headache reading them! €100 odd million in largess, Treasury’s deposits down to €4 million and falling, €19 million unsecured creditors and rising. What are they trying to save? It’s much more fun in China!
As for NAMA – Such sheer levels of incompetence. What were they spending a weekend discussing? A derisory offer.
Sorry Johnny, I know we have only read one side of it, but on this reading…. you’re on a loser, unless Mary’s telling porkies.
Heading for my stiff drink now,appears or alleged that Bruder was being economical with the truth !
@NWL, Thank you for making them available. Much appreciated. Without seeing the other side’s case, I hesitate to comment other than to say that whoever prepared the NAMA affidavits did a good job.
BTW, You can’t take a sweep of all the rents, prefer yourself – and not allow the company to pay its unsecured creditors. Someone needs to tell NAMA that’s known as trading insolvently …. and it comes back to bite you (i.e. NAMA).
@ wstt- Is not a wholly standard covenant in most mortgage deeds that the first charge holder is entitled to all rents accruing from the secured property. Im not an expert in company law but I thought this was a standard premise. If it is the case that whilst the assets were within an insolvent company and the first charge holder is not entitled to all rents then I would suggest it makes perfect sense to appoint a reciever over the asset, remove it from the group, and ensure that they as first charge holder receive the income from the proeprty they have financed.
I might be missing something obvious here so indulge me!
What’s Bruders problem,can’t hold a pen,sign anything ?
Why NAMA,wasting so much time energy effort on someone with no dog in the fight,respect,deference or what ?
@jg, It’s the battle of the ex-institutional “guns for hire”. Mary Birmingham who was Property Manager at Irish Life versus John Bruder, one time Head of Property at AIB Investment Managers.
One other point; the affadavits make great reading. Am I correct in saying McCann Fitzgerald acted for TH when the standstill agreement was sought, but had come off record (or just stopped acting for them) when they sought to take this legal action?
If correct thats a very interesting detail.
@Don, the current solicitors on record for Treasury Holdings in the ongoing case are DAC Beachcroft. It is not clear from the filings that there was a change of solicitor when the current action was initiated on 25th January 2012, so it looks as if DAC Beachcroft have been Treasury’s solicitors in this matter from the start (on 25th Jan).
It is interesting that the Irish Times this morning reports that McCann Fitzgerald has been awarded a contract with NAMA.
http://www.irishtimes.com/newspaper/finance/2012/0223/1224312240987.html
The appointments reported this morning don’t seemingly match any recent tender by NAMA, and I am presently trying to get more information on these appointments and the relevant NAMA tender.
Thanks NWL. They may have been their Solr from start of this action, but my point is if McCanns came off record it is a damning indictment of TH case if they were not willing or able to stand over it. Not many people would like to change jockey mid race
@DG, You may be viewing McCanns departure from the wrong perspective. Sometimes a quiet phone call and a new contract may say it all.
I had considered that alright WSTT. Again, assuming the NAMA affadavits are factual it would seem to me like McCanns negotiated/formalised the standstill with TH; where there was an apparant agreement made not to take any action if a reciever was appointed, post standstill. Perhaps McCanns, who I would hold in pretty high regard, decided they were unwilling to support a clear contravention of that agreement?
No question it would also have been seen as a poor show by NAMA and may not have been a great relationship move.
@DG/WSTT, okay, the legal appointments at NAMA reported in the Irish Times this morning actually relate to a tender which was awarded on 3rd January, 2012. Here is the notice of the award to the four law firms – McCann FitzGerald, A&L Goodbody, Arthur Cox and William Fry.
http://www.nama.ie/download/contract_award_notice/Corporate%20Legal%20Services%20Panel.pdf
It might only have been published now to allow unsuccessful tenderers to appeal NAMA’s decision. So if McCann FitzGerald was appointed by NAMA to a panel on 3rd January, 2012, wouldn’t that have prevented that firm from acting for Treasury in the standstill agreement on 9/10th January, 2012.
I listened to Pat Kenny this morning talking to developer Noel Smyth and Philip Lynch on ABP’s decision to refuse planning on the proposed new childrens hospital. Did Harry Crosbie comment yet? Is Johnny Ronan or Richard Barrett or David Agar on the hospital board?
Not forgetting Bernard McNamara who offered to build a hospital at one point! Yikes!
Mary Birmingham’s affidavit is causing me to scratch my head. In section 33, she talks of a funding liability for Montevetro of €30 million, then in section 47 she speaks of funding Montevetro to the tune of €75 million. Which is it?
@WSTT, I had the impression that it was both, that NAMA funded the completion of the development to the tune of €30m and that when it was sold to Google for €99.9m that NAMA had provided what presumably is staple finance for €75m.
@ JG
Ref John Mulcahy the Society of Chartered Surveyors and the valuation model.
The valuation model the surveyors and the auctioneers used were the source of the disaster.
Any property /asset has only two values ,one the price you can get for it or two the net present value[npv] of the future income stream. If an unwise investor paid one vendor 5 euro for a 1 euro note –the surveyors would value all other 1 euro notes as 5 euro notes. Now we all know the npv of 1euro is 1euro. So if an unwise investor paid 5million euro for a property ,even thought the npv of the property is 1 million euro ,then a surveyor would value all other similar properties at 5 million. This is what caused the property disaster. Your four year old child could have seen through this nonsense.
Any Docs fromTreasury side Presented?
@Patrick, they’ve been requested, and if they become available they will be posted. It’s worth saying that the affidavits on NAMA’s part may, and only “may”, give a partial view of events, but absent the Treasury documents the NAMA view of events is likely to prevail. Court reporting of Treasury’s position is threadbare.
Having taken time to re-read the affidavits and reflect on them, a couple of obvious points arise, without even seeing the Treasury affidavits:
1. The meetings with Hines and Macquarie look like hastily arranged setups – and NAMA doth protest too much about how they worked the weekend. I know some of the participants representing NAMA and they don’t know their a*se from their elbow – just a waste of space at any meeting. It smacks of going through the motions over a limited time period.
2. Neither Hines nor Macquarie were ready. They had only “high level” figures and had done no due diligence whatsoever to enabled them to make an informed bid.
3. Neither of the two “interested parties” (as Mary describes them – Johnny calls them “investors” – talk about splitting hairs for no apparent reason), had arranged core financing and had to look to NAMA for it. Once more, suggesting a rushed scenario.
4. No deal had been agreed between Treasury and the two investors (using Johnny’s description this time to be seen to be fair). Hines described the Treasury requirements as too high.
All in all, both sides going through the motions in a hasty non agreement. It cannot have been seriously negotiated or considered in the imposed time frame. One would have to see discovery.
For that reason alone, I think that Treasury will probably achieve a hearing and if discovery is allowed there will be some very interesting communication between the parties – particularly between NAMA and Hines, who seem to have opened up the possibility of dealing with NAMA receivers while still talking to Treasury. NAMA and Hines cross correspondence – now they would be interesting and entertaining documents offering a real insight into the workings of NAMA.
Conclusion at this point. Treasury will win the battle, but will ultimately lose the war. But if we can watch from the hill by opening up discovery, it should offer insights that will be enlightening.
Richard Barrett is reputed to have the best legal mind in the world-is this true?
@HR… probably not… but he sometimes wears nice silk shirts.
Any Luck with Treasury Docs,Would make an interesting read
Cherchez la femme. That all-too-familiar phrase that first saw the light of day in a 19th century novel by Alexandre Dumas (the elder) nicely captures NAMA’s case. Whatever irrepressible amorous streak Johnny may have obviously doesn’t impress Mary Birmingham. Mary is acting like a woman scorned and NAMA’s case stands or falls on her affidavits. So one can expect Johnny’s reaction to reflect that fact at some point. If Treasury is to win, it has to discredit Mary, or figuratively Johnny will once again be hunkering down holding his genitals. Chasing other TAILS and broken nuptials perhaps? Watch this space.
What did I tell you?…… Hell hath no fury etc. Is the fragrant Mary credible or is she not?
From today’s Sunday Independent:
“At no stage has Nama accepted the propriety of what was done in the TAIL transaction,” Ms Birmingham added.
While Nama’s version of events in relation to the TAIL transaction dominated the front page of The Irish Times last Thursday morning, things took something of a twist in the High Court later that day when the agency’s Senior Counsel Paul Sreenan conceded, on foot of an interjection from Ms Justice Finlay Geoghegan, that Treasury had in fact agreed a specific pre-condition concerning the deal with Nama.
According to the Memorandum of Understanding (MOU) signed by Treasury Holdings with Nama on December 13, 2010, Nama, amongst other things, provided its consent for the transaction to proceed once it was granted specific security over the group’s charge over the TAIL shares, allowing Nama to benefit from the net proceeds of their sale.
Interestingly, the pre-condition contained in Treasury’s MOU with Nama also stipulated that 33.3 per cent of all future post-tax profits in excess of the €20m in TAIL shares would be remitted to the developer on the basis that the money would be used exclusively to repay its Nama debt.
@WSTT, that reporting in the Independent was confusing. By announcing “things took something of a twist in the High Court later that day when the agency’s Senior Counsel Paul Sreenan conceded, on foot of an interjection from Ms Justice Finlay Geoghegan, that Treasury had in fact agreed a specific pre-condition concerning the deal with Nama”
you’d think you were in for some great revelation, some contradiction or some juicy gossip at least.
And all we get is NAMA was okay with the TAIL transaction as long as NAMA was given the shares transferred! Or at least specific security over them. And not only that but if the shares generated a profit over their original values then 1/3rd of that profit would be used to pay down NAMA debt!
Some twist – what is actually reported is exactly in line with NAMA’s claim about the propriety of the transaction.
@NWL,
I think that the point he was making was that there was an agreement over the TAIL shareholding whatever about the fact that NAMA might have held its nose regarding its propriety.
@WSTT, I see, but the agreement gave NAMA specific security over the shares sold by Treasury and 1/3rd of any profit made on the shares above their original value. Doesn’t that have the effect of reversing the transaction AND giving NAMA a premium on any change in value?
Or to frame it in another way. If Developer A gave his wife €200,000 of jewellry just before NAMA took over Developer A’s loans. NAMA says it is not happy with that transaction and wants it reversed, so that NAMA can sell the jewellry and apply the proceeds to the outstanding loans.
Now if NAMA is given specific security over the value of the jewellery when it was given to the wife PLUS 1/3rd of any increase in value since then, then if the loan from Developer A to NAMA defaults, then NAMA can enforce its security and take back the jewellery and sell it and apply the proceeds (less 2/3rd of any increase in the value of the jewellery since the transfer) to the loan. Isn’t this what has happened with the Tail transaction in terms of NAMA’s offer?
@NWL, In the real world – yes. In the world occupied by Treasury & NAMA , where €100,000,000 passes to companies allegedly insolvent to the tune of a billion – who knows what the terms were?
Appears Anglo,heavily involved in lending here,I always though their modus operandi was personal guarantees,that would never be called !
Perhaps,applicable here to non group lending,for say founders or senior executives.
In addition to the non performing loans in NAMA,there is also the Billion in group debt out there,the majority in default.
The website is back up!
Any reply with the affidavits/docs from Treasury side in particular Mr Barrett??
@Patrick, they were requested. They are of interest and I think we’d all like to see Treasury’s side of the story, in the same way we’ve seen NAMA’s. No response unfortunately from Treasury, will ask again, but if they’re not posted, then they haven’t been received.