“our original plan with the major debtors was to put memoranda of understanding in place and then carry out full restructurings. We discovered that when we got past those debtors – these were the top 30 – we decided it would be more efficient to consider the documentation and then draft letters of support where the documentation is fine. We only fix documentation which needs to be rectified. It was about streamlining the process and getting everything done much quicker.” NAMA CEO Brendan McDonagh speaking before an Oireachtas committee in March 2012
In the beginning, NAMA told us that it was going to consider developers’ business plans and would enter into agreements with those worth saving and working with; all fine and dandy. Then NAMA explained that “an agreement” comprised three sequential documents – memorandum of understanding, heads of terms and final full agreement – and that all three needed to be signed by NAMA, the developer and in some instances, the developer’s spouse. And then there was a procession of weasel words which had the effect of “bigging up” NAMA’s progress with these finalising these agreements. Then last summer, well over a year after NAMA had acquired the first tranche of loans, it was RTE presenter Mariane Finnucane who finally wheedled the truth from the NAMA chairman Frank Daly – only one developer was close to signing all three documents. And then last month, NAMA finally admitted to TDs and senators that it had abandoned the formal agreement approach and was now just working informally with developers based on business plans. It doesn’t exactly look like sure-footed management brilliance on NAMA’s part.
Northern Ireland developer, McAleer and Rushe has just filed its accounts – available here – for the year ending 31st March 2011. McAleer and Rushe has some interests on this side of the Border but is perhaps better known for its development on Baker Street in London, the sale of the W Hotel in Leicester Square also in London and recently has announced the development of a major hotel in Manchester. The county Tyrone developer employs just over 100 people and has actually recorded an operating profit for 2011 of GBP 546,987 (€650k).
But lo and behold, in a note to the accounts, it is stated that the company has entered into a “medium term formal funding agreement” which expires in March 2016. This is the second confirmation of a NAMA funding agreement we have recently; although not quite as formal a communication, veteran TV personality Mike Murphy said in an interview a week ago that Pat Doherty’s Harcourt Developments “has reached an amicable arrangement with NAMA that will stretch over a number of years”. Pat is presently busy with the operation of the Titanic exhibition in Belfast. So despite NAMA’s claims to have abandoned the formal agreement route, two Northern Ireland developers have agreements with NAMA; as with the disposal of developers’ mansions, maybe NAMA does things differently there…
The borrowers are in a more secure place with NAMA as banking partner more so than at any other stage before the crisis unfolded. – Who cares?
Obviously one that bolted out the door before it was firmly shut.
The current strategy is to say “No, your business plan is unacceptable” but then offer a “letter of support” on a 3 month rolling basis. So much more flexible for NAMA than entering into a legal agreement that could prove to be “messy” when the question of NAMA obligations under it might face challenge down in the Four Courts at some future date.