As Sean Dunne is finding out in his new home of Connecticut in the north-east United States and as Bernard McNamara found out in a remote Nigerian state, the world these days is a small place. And Treasury Holdings founders, the dynamic duo of Richard Barrett and Johnny Ronan seem to be realising that the distance between Singapore and Dublin 2 has been reduced to the click of a mouse or the press of the “send” button on an email.
Treasury Holdings itself is the massively insolvent Irish property group founded by the dynamic duo, but which is now seemingly teetering towards total collapse, though that doesn’t stop claims that a White Knight can be found. But Treasury Holdings is/was just a predominantly Irish operation, though with some connections to UK property. Over on the other side of the world, the dynamic duo had created an entirely separate operation, Treasury China Trust (TCT) to develop property in China.
Never the twain would meet, but it seems that now they two have met spectacularly. 30% of TCT is owned by Messrs Ronan and Barrett who NAMA is personally pursuing for repayment of loans in Ireland. TCT has a market capitalisation today of €166m so the 30% stake equates to about €50m, enough for NAMA to have a intense interest in goings on at TCT.
NAMA isn’t the only creditor pursuing Treasury Holdings in Ireland – Belgian bank KBC is seeking the repayment of €75m and during the course of hearings last month to have Treasury Holdings wound up, it emerged in a surprise announcement on 28th August, 2012 that Treasury Holdings had just sold two companies to Richard Barrett. The sale caused consternation at NAMA and led to the Agency changing its position and giving its support to the winding up petition.
And mystery and controversy continue to surround the sale of the two companies (detailed in the box below)
Messrs Barrett and Ronan seem to have been concerned that if Treasury Holdings in Dublin was wound up, there would be a knock-on effect on the China operation, specifically with a company called Forum Partners – where incidentally controversial former NAMA employee Enda Farrell works – which has loaned money to TCT but a term of the loan which has €44.5m currently outstanding, is that if control of Treasury Holdings changes, the loan to TCT can be called in on demand, and TCT doesn’t have the cash. This all seems bizarre, we don’t know why Forum Partners would require such a clause given the claim that TCT and Treasury Holdings are two separate companies. Nor exactly why the sale of the two companies was necessary to prevent the triggering of the demand.
The Irish Times reported last week concerns that the price paid by Richard Barrett was significantly less than a valuation of the companies earlier this year by Goldman Sachs.
In response, TCT yesterday issued its own statement (extract shown at top), a statement which doesn’t deny any report or claim or allegation made in the Irish media. It is almost redundant in cautioning investors about the accuracy of media reports. Perhaps the real purpose of the statement is to fire a shot or two across the bows of the “former independent non-executive directors” and presumably one of the rights being reserved by the Board of TCT is the right to take legal action against former directors.
The stock price or unit price of TCT has halved in the past year from 2 Singapore Dollars to just SGD 1.035 today, which is a concern when the company is operating in a buoyant market like that in most parts of China and the results for the first six months of 2012 seemed healthy enough.
Although NAMA didn’t make any comment on the news that two Far Eastern companies had been sold to one of the founders of Treasury Holdings, you might deduce the NAMA decision to change from neutral to supporting the KBC winding up application indicated the surprise and unease felt by NAMA at the news.
With almost daily reporting on developments in TCT in the Irish media, complaints about TCT to the Singapore Stock Exchange, upset former directors and irate Singaporean investors, it seems as if TCT’s operations will remain under close scrutiny for some time to come.
_____________________________________________________________
The Treasury Holdings Sale of Two Companies to Richard Barrett
The players: Johnny Ronan and Richard Barrett, the founders of Treasury Holdings and holders of a 30% (combined) shareholding in Treasury China Trust (TCT). Richard David, the CEO of TCT and a supporter of Messrs Ronan and Barrett. Stuart Leckie, Jen Shek Voon and Ray Horney, former directors of TCT – described as “sacked” directors who have made a governance complaint to the Singapore Stock Exchange where TCT is listed.
What: Sale by Treasury Holdings of two companies (1) Treasury Holdings Real Estate PTE Limited and (2) Treasury Holdings (Shanghai) Property Co Limited to a company controlled by Richard Barrett called Oriental Management Services Limited, a company incorporated in Jersey.
How much: €2.263m, payable in tranches over two years
Independent valuations?: According to Richard Barrett, yes there were two independent valuations by unnamed Irish “Top 10” accountants. Apparently confidentiality prevented the naming of the two accountants.
Financial performance: The two companies earned €15.6m in fees in 2011. The companies have a net asset value today of €1.9m. Apparently the valuations projected profits of €1.68m in 2012, €108,000 in 2013, (€96,000) in 2014, (€313,000) in 2015, and €28,000 in 2016 – in other words, profit of €1,407,000 in 2012-2016.
When: between 24th-27th August 2012.
Approval: The subsidiaries were owned by Treasury Holdings which is controlled by Messrs Barrett and Ronan. TCT was notified of the sale and has said “the board considered that such transfers were in the best interest of [TCT] unitholders as it removes one of the change in control triggers for the bonds” A minority shareholder by the name of Mano Sabnani had complained earlier in August in the Singapore media about poor corporate governance at TCT.
So where’s the beef: According to the Irish Times, the two companies were valued “earlier this year” by Goldman Sachs at “a very material multiple of €2.3m” with a suggestion the valuation “might have been as high as €31.8m”. The implication is that Richard Barrett obtained an asset below its true value, and given NAMA’s potential claim on shares held by Johnny Ronan and Richard Barrett in TCT, that means NAMA might be bilked in recovering sums claimed.
And has Richard Barrett gotten away with it scot-free? Firstly Richard Barrett is saying he paid a fair price for the companies and that he “has nothing to hide”, and secondly he has been ordered by the Irish courts to produce an affidavit in September detailing the sale, which might lead to the sale being challenged and possibly reversed.
_____________________________________________________________________
not trying to be pedantic but…..
i think its johnny with just over 12,richard at 8 and TAIL which is jointly owned with just under 10.
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-ownershipSummary
@John, fair enough, the 12% was sourced here
“Mr Barrett is also chairman of TCT and owns about 12 per cent of that company”
http://www.irishtimes.com/newspaper/finance/2012/0905/1224323611602.html
Maybe Ciaran assumed that 50% of TAIL belonged to Richard as well, though that would give you 13%. Correction made above.
Does the announcement not state that the companies sold to RB are subsidiaries of Treasury Holdings ie the Irish group, not of TCT the listed Far Eastern company?
@Dontyaluvem, you’re right and correction made above – it seems it was indeed Treasury Holdings and not TCT, which formerly owned and then sold the two companies.
@NWL actually i had a blonde moment myself,it was detailed on Aug 28th.
“The Trustee-Manager has been acquired by Oriental Management Services Limited, a private company incorporated in Jersey and beneficially owned by Richard Barrett, joint owner of Treasury Holdings, Chairman of the Trustee-Manager and a substantial Unitholder of Treasury China Trust (“TCT”) with a direct interest of 17,449,720 Units (6.88% of Units in issue) and a deemed interest of 27,741,770 Units (10.93% of Units in issue).”
Aug 28
Regarding ownership of TAIL-this was the statement.
“Treasury Asian Investments Limited is owned jointly by Mr Richard Barrett and Mr John Ronan, and currently holds 24,929,095 units in TCT (“Units”) or 9.8% of the total Units in issue.”
April 27
In summary Barrett owns directly under 7%,but perhaps Ciaran got something correct in that report,in that if you add in the half of TAIL its almost 12%!
But the statement from TCT regarding Barretts holding is misleading, disingenuous and incorrect,expect a revised statement in the morning.
quick update on the ‘fees’-source is the 2011 report linked.
Property Management fee’s 3,052,000 in 11, 2,648,000 in 10.
Trustee Manager fee’s 15,028,000 in 11, 6,425,000 in 10.
The fee arrangements for these two companies are outlined in the linked annual report.
Trustee Fee of 0.02% p.a. of value of assets.
Now here is the ‘exciting’ bit, there are two properties currently for sale,one the logistics center has terms agreed and should close any day.
Guess what yes-there of course is a divestment fee of 0.5%
One wonders who the two Irish ac firms are………..
Year end 2011 ‘book’ value of assets held for sale.
Beijing Logistics Park 65,000,000
Central Plaza 357,200,000
Fees due upon sale 21,135,000 or about 17,000,000 US Dollars sweet !
How much did Barrett pay sorry put on the never never again,few million i think.
Sourced the numbers back to 2007,will do follow up on the fee structure for the property manager.
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-reportsArchives
“Trigger: Problems, Dave?
Rodney: I don’t want to talk about it Trig. You ever been wrongly accused of something?
Trigger: Yeah once.
Rodney: Yeah, How did you get out of it?
Trigger: Well I didn’t – I was guilty.”
Only Fools and Horses.
This only deals with the trustee manager NOT the management company.
Most of the detail and info. on the two companies ‘bought’ on some funky and weird installment plan NOT cash as claimed by Barrett,are contained in this linked document.I thought only poor people bought on installments,or those with liquidity issues.If he paid cash would he have gotten a better deal.
The doc. was issued in conjunction with the switching of the listing from London to Singapore,the original agreements were available for six months,but do not appear to be in the public domain.NOTE,they may have been changed.
“TCT Introductory Document”
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-reportsArchives
Trustee Manager of Treasury China Trust.
Treasury Holdings Real Estate Pte. was incorporated in Singapore on Feb 2010,with paid up capital of US$100,000.
Here are some key provisions from the Memo. and Articles of Association.
FEES:can be paid in cash or units in some situations.
“a base fee at the rate of 0.5% per annum of the value of TCT’s Property
• a performance fee at the rate of 4.0% per annum of the Net Property Income of the real estate held by TCT, whether directly or indirectly, in the relevant financial year…”
-acquisition fee’s of 1%
-divestment fee’s of 0.5%
-trustee fee 0.02% p.a on value of TCT property-cash only here !
Lovely little section on REMOVAL-gosh did Barrett omit this in his filings.Pg 175.
“Under the Trust Deed, without prejudice to, and to the extent allowed under, the relevant laws,regulations and guidelines, the Trustee-Manager may be removed:..(c) is insolvent or under judicial management;”
Initial Loan:-yep not making it up….
“The Trustee-Manager and CREO have agreed on an initial loan to be granted to the Trustee-Manager amounting to US$5.0 million.” pg 212.
“Last Friday, Mr Barrett told The Irish Times he had paid €2.263 million in cash for the businesses.”
http://www.irishtimes.com/newspaper/finance/2012/0905/1224323611602.html
Fees paid in last few years to ONE companies Barrett got on ‘hire purchase’.
Fee’s year end 2011-15,028,000
Fee’s 5/2010 to 12/2010 6,425,000
Also paid were acquisition fee’s year ended 12/2011 pg. 113 annual report.
Acquisition fee 2,152,000
‘reimbursements’ to THRE of 334,000 were also incurred/paid.
Summary:for ONE the companies.
Fees partial 2010 and full 2011are 23,939,000.
Note:2nd qtr. 2012 results available but THRE fees not broken out,but most likely stayed constant or increased on 2011.
another disingenuous misleading and just WRONG statement from Barrett, absolutely completely shameless.I know there are cutbacks at the IT but do they not have a fact checker-this is disinformation.
“He said a liquidation of Treasury Holdings could have had disastrous results for TCT and its 500-plus Irish retail investors.”
http://www.irishtimes.com/newspaper/finance/2012/0831/1224323380406.html
Pg 117,2011 annual report,32 unit holders in Ireland!
The TOTAL number of unit holders is actually 265.
After March 19,2012,did over 400 Irish retail investors just bail into TCT ?
The 2011 Annual Report of Treasury China Trust refers on page 1 to “strong commitment to high quality corporate governance and transparency”
Ray Horney soldiered for many years with Richard and Johny before being sacked by one or both of them from the TCT Board recently. Presumably he shares the commitment to high quality corporate governance and transparency.
The “Enda” connection,picked up first by NWL in above post,great work as always.Perhaps your answer is somehow tied up in this WSTT.
With the unit price hovering around 1 looks like they wont be ‘in the money’ any time soon,not enough cash at TCT to redeem them either.
Utilising J.P. Morgan (S.E.A.) Limited as its Placement Agent, TCT has entered into a binding agreement with Forum Partners (a party unrelated to TCT) for the provision of a convertible bond on the following terms:
Amount: SGD59,700,000
Equivalent TCT Units: 28,428,571
Conversion Price: SGD2.10 per Unit 7 (representing a 20.0% premium to TCT’s closing price on 23 February of SGD1.75 per Unit)
Coupon: 6.0% per annum (payable semi-annually)
Yield To Maturity: 16.75% per annum
Term: 3.5 Years”
http://www.treasurychinatrust.com/Pics/Huai_Hai_Mall_Acqusition_Final_23-02-11.pdf
@Dontyaluvem unlike the dynamic duo hes no longer indemnified by the trust but…………..they are,actually not sure about Ronan anymore.
Wow,can the unit holders really be picking up Barrett’s legal bills here,say it aint so…….
Circumstances under which the Trustee-Manager may be indemnified out of the Trust Property of TCT
“In general, subject to any express provision under the Trust Deed and without prejudice to any right of indemnity at law given to the Trustee-Manager, the Trustee-Manager is entitled for the purpose of indemnity against any actions, costs, claims, damages, expenses or demands to which it may be put
as TCT’s trustee-manager to have recourse to the Trust Property of TCT or any part thereof, save where such action, cost, claim, damage, expense or demand is occasioned by the fraud, wilful default, breach of trust by the Trustee-Manager or where the Trustee-Manager fails to exercise Due Care.”
Pg 200 into. doc.
john
RB learnt a lot from his REO experiences and must have been very pleased with what he was able to put in place for the Trustee-Manager in TCT.
Given TCT’s commitment to good corporate governance and transparency I am surprised that there should be any issue over Board confidentiality.
Perhaps someone should confirm with Mr. Horney that the Trustee-Manager has nothing to hide
The GS report will eventually come out,after all the unit holders paid for it.
The discount to NAV or net asset value is simply astounding and unsustainable,prior reports indicated that Barrett had pledged units for loans,if still outstanding he must hit margin calls,but may be paid off.
I thought GS was called in to plan a privatization as the units are severely discounted due to the Ronan/Barrett reputation risk factor.
Oh for the record neither short nor long them,but very very compelling pricing if you can get rid the trustee!
Very familiar with the fee gouging,reviewed and commented prior on REO.
It’s a mirror of that structure,how did that work out again …..
Mbl. will detail the management co. fees tomorrow,those two Irish AC firms must be a little apprehensive.
John – what else have the unit holders paid for?
Perhaps Mr. Horney will enlighten us
@Dontyaluvem,I’m NY based its fashion week,hoping run into a certain Irish Playboy bunny tonight….
Stay tuned just warning up,there is lots more,but NWL correctly insists on sourcing and linking specifically if controversial.I’m mobile impossible to link or reference materials,but did NAMA for example consent to the recent purchase from TAIL of units by Barrett?
Assume,it’s reversible….
“Treasury Holdings Real Estate Pte. Ltd., as trustee-manager (the “Trustee-Manager”) of Treasury China Trust (“TCT”), is pleased to announce that Richard Barrett, Chairman and Non-Executive Director of the Trustee-Manager, has acquired an additional 1,800,000 units in TCT (“Units”), which has increased his direct holding in TCT to 6.88% (17,449,720 Units) from 6.17%.
These units were acquired from Treasury Asian Investments Limited (“TAIL”), an existing unitholder in TCT, which now holds 9.82% (24,929,095 Units), reduced from 10.53% (26,729,095 Units) prior to the sale.
As outlined on page 54 of the TCT Introductory Document dated 21 May 2010, the prospect of capital gains tax under Irish tax law (“CGT”) being levied against various unitholders of TCT was identified as a possible consequence of the listing of TCT. TAIL is the subject of a CGT assessment from the Irish taxation authorities which stipulates the payment of CGT for Irish domiciled entities that transfer existing shareholdings from a company to a trust. TCT was listed on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”) on 21 June 2010 by way of introduction, whereby shareholders in China Real Estate Opportunities Limited (“CREO”), a company which was previously listed on the AIM Exchange in London, transferred their respective CREO shares to the Trustee-Manager in return for the issuance of Units to them. The foregoing arrangement has triggered a CGT obligation based on the original acquisition cost of the CREO shares by TAIL and the subsequent price at which the Units were created.”
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTI0NjI4fENoaWxkSUQ9LTF8VHlwZT0z&t=1
Irish playboy bunnies await,more soon,Jayus CGT taxes to pay too….