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Archive for November 20th, 2012

“It’s gotten to the stage where people are so frightened that some living on their own lock themselves in their bedroom at night and leave 50 euro on the kitchen table. That is no way to live and the fact that this is what’s going on before these proposed massive closures makes it all the more worrying.” Deputy Thomas Pringle speaking in the Dail on 20th November 2012

Yes, Irish society has finally broken down to levels last seen in Mad Max  and in Donegal, householders in isolated rural areas have taken to leaving €50 on the kitchen table, before they go to bed at night, as a sacrifice to burglars so that they won’t cause injury or worse.

It would be comical if it weren’t true, and in the Dail this afternoon, the Independent TD for Donegal South West, Thomas Pringle challenged An Taoiseach about closure of rural Garda stations which has led, according to Deputy Pringle, to burglars operating with impunity in areas of Donegal. It was Deputy Pringle who asked Enda Kenny if he was aware of the practice of Donegal householders leaving burglary money out on the table at night.

Donegal is also the county where it was revealed during the summer that a member of the public was asked to give a Garda a lift to the burglary scene.

The serious points being raised about cut-backs in An Garda Siochana are going unanswered. Taoiseach Kenny this afternoon referred more than once to the waste of a “Garda sitting by himself in a 100-year old building by himself on a Wednesday afternoon” but at least 39 stations have closed so far since this Government has come to power and more closures are imminent. The Government says that compared with Scotland which has a population of 5.2m and 306 police stations, that the 700-odd Garda stations in Ireland is excessive. There has been a freeze or “moratorium” on Garda recruitment since March 2009 and  the force saw 722 retirements in 2009, 362 in 2010 and 436 retirements in 2011 and is likely to have about the same in 2012, this from a force of 13,900 at the end of 2011 plus 2,000 civilian support staff and 800 Garda Reserve members.

Despite what An Taoiseach says, there has been a major reduction in headcount and presence of An Garda Siochana in the State.

The latest crime statistics from the CSO confirm that burglary has ballooned. There were 28,623 reported burglaries in the year to June 2012, up 10.3% from 25,960 in the previous year.

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Just consider this imaginary venture for a moment. If I, together with John and Mary invest €10,000 in a business and our shareholder agreement says that none of the three of us can sell our 33.3% stakes without offering it to the others first; a little while later, if Mary sells her 33.3% stake to Theobold, my worst enemy, without offering it to John or myself first, you’d think I could go to court to have the sale set aside, allowing myself or John to at least bid for the stake and match whatever Theobold was offering. This all seems plain and simple.

Yet spare a thought for Paddy McKillen who together with former tax-man Derek Quinlan, Lochlann Quinn and the Green family from Manchester, bought the Maybourne hotels in 2004 with a shareholder agreement, which on the face of it, is similar to my imaginary arrangement with Mary and John, and yet over the course of the past two years, Paddy’s business rivals, the billionaire Barclay brothers have not only acquired the Green family share but now control loans secured by Derek Quinlan’s shares.

Not only that, but when challenged as to whether Derek will use his shares to do their bidding because, after all, he has received millions from them in financial support, the Barclays say “no, no, we’re just helping out a friend”. And so good is that friendship that the Barclays can’t even correctly spell D-E-R-E-K and referred to him as “Derrick” in mobile phone texts!

And separately, Paddy borrows money to buy the hotels from a lender which agrees in writing it will not sell the loans unless it consults with him beforehand, and even then will only sell the loans to a financial institution. And what does NAMA do, but sells the loans to a company set up by the Barclay brothers – no relation to Barclays bank, it should be noted – whose sole aim is to acquire the loans, and Paddy gets less than 60 minutes “consultation” about the sale.

And then finally, just to rub it in, throw in a British High Court judge who dismisses Paddy’s case in a lengthy judgment that refers to the knighted Barclay brothers in matey terms like “Sir Frederick” and then hits you with legal bills said to be €25m.

You mightn’t blame Paddy for being a tad peeved at it all.

And last weekend’s news in the Sunday Times (not available without a subscription) that our US friends, Blackstone – the investors who are waiting for “blood on the streets” before investing in Europe – have now offered to refinance loans that are due at the Maybourne hotel group,  really is the cherry on the cake for Paddy. As part of the refinancing,  Aine Coffey at the Sunday Times reports that Blackstone is insisting the shareholders stump up GBP 145m (€180m) of additional equity, of which Paddy’s share will be GBP 52.5m (€65m) and if the new equity is not forthcoming from Paddy by mid-December 2012, then Paddy reportedly faces the prospect of the Maybourne group being placed in administration at the behest of the Barclays. It seems that one way or the other Paddy faces his shareholding being severely diluted or potentially seeing its value wiped out. Paddy McKillen’s spokeswoman is quoted by the Sunday Times as saying “the rights issue is a hostile takeover tactic by the Barclays..it is not required by the hotel group as there are many other better offers on the table”

Paddy has been given leave to appeal the judgment of the British High Court which dismissed his claims with respect to the control over Derek Quinlan’s shares. And a hearing is expected in the next three weeks. He is also said to be pursuing an appeal against the decision of the British courts to approve the sale by NAMA of the €800m loans to the Barclay brothers.

UPDATE (1): 1st December 2012. Mark Hennessy in the Irish Times today reports that Paddy has had what seems to be a terminal set-back in his bid to have the sale of the GBP 660m (€800m) of loans that were owed by Maybourne, the hotels group to the Barclay brothers’ company, Maybourne Finance, nullified. It is reported that the UK’s Supreme Court has rejected Paddy’s request to appeal the Court of Appeal’s decision last summer which declared NAMA’s sale of the loans to have been lawful. There was no comment from Paddy’s spokesperson at time of writing. Since 2005, when the newly formed Supreme Court replaced the House of Lords, the Supreme Court is the highest court in the UK, so this looks like the end of then road for Paddy on this strand of his challenges. He still has an appeal hearing pending on his challenge to the High Court judgment which dismissed his case that the Barclays’ had unfairly acquired control of the group.

UPDATE (2): 1st December 2012. The ruling by the UK Supreme Court is shown here

SupremeCourtPMcK

The decision yesterday relates to an application by the Barclays for the courts to rule on the NAMA matter before the hearing of the appeal of Judge Richards ruling in August 2012. Paddy defeated the application at the High Court, which judgment was then appealed by the Barclays to the Court of Appeal where the Barclays were victorious and Paddy sought permission to appeal to the Supreme Court which was denied yesterday. You would almost get a headache keeping track of the various matters at issue in this case, and their position in the court hierarchy!

What might be regarded as the main topic of appeal, the Barclays’ acquisition of control over Derek Quinlan’s shares, will be heard in February 2013 in front of the UK Court of Appeal, apparently at the request of the Barclays after the Court of Appeal had previously indicated it would hear the appeal before Christmas. The Irish Times today indicates that Blackstone’s refinancing has been paused until “the end of the year”.

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Last week in the Dail, the Independent TD Shane Ross called for a register of judges’ interests in the wake of a court case where the judge was forced to recuse himself at an advanced stage of proceedings after it emerged the judge had a new beneficial interest in the case through the acquisition of shares in a company. Deputy Ross’s proposal was resisted and is unlikely to gain traction despite its obvious attraction in promoting transparency and protecting the public against conflicts of interest. We already have a Register of Interests in the Oireachtas, something highlighted recently by Deputy Michael Lowry’s omission of a property in Wigan in the UK – the Oireachtas register famously omits debts so we can’t see what loans a politician might have, which might be relevant in some cases such as that of Minister for Health James Reilly’s debts.

It would be helpful if there was a Register of Interests for RTE presenter Pat Kenny.

Pat is unlikely to be affected by the appointment yesterday of an interim examiner at the Treasury Holdings company Carrylane Limited, this despite the report in the Sunday Times in June 2012 that Pat had bought a suite at the Ritz Carlton hotel in Wicklow worth “up to €2m”. Carrylane Limited owns the hotel but the ownership of the suites is unlikely to be affected by the examinership. Having said that, the report yesterday paints a downbeat picture of trading at the Ritz Carlton and with occupancy rates of just 40%, if Pat was depending on renting out his suite, he might be nursing some nasty losses.

Pat also cropped up recently in the Nick Webb/Shane Ross book “The Untouchables” – page 137 – as an investor in the “Conduit partnership” – a syndicate of property investors  set up by former tax-man Derek Quinlan. It is not totally clear what property the partnership invested in, but fellow RTE star, Gay Byrne is also named in the book as an investor, and we do know that Gay is on record saying he is nursing substantial losses from his investments with Derek Quinlan. It was reported that Gay and Pat invested €1m and €600,000 respectively in the Four Seasons Hotel in Budapest, Hungary but it is not clear if this was with the Conduit partnership, but it is reported that the loans on this property in Hungary have been transferred to NAMA.

And Pat is also reported to be an investor in another Quinlan syndicate, the Lucy Partnership along with the Dunner, Sean Dunne. This partnership is understood to have bought property in the International Financial Services Centre in Dublin city centre.

According to the latest release from RTE which is for 2009 – three years ago – Pat is presently paid €729,604 which some might think is not bad in a media market which is 1/15th of that in the UK.  It is not clear what, if any, income is generated by Pat beyond RTE.  Pat is RTE’s highest profile presenter with Frontline and Prime Time on TV and his daily radio show. It might be helpful to viewers and listeners if Pat were to provide a register of his interests and any debts – clearly on some economic matters, property, NAMA, developers, wealth tax, property tax, Paddy McKillen, the Dunnes, Derek Quinlan, Pat may face conflicts between his personal dealings and assets and his duty to be impartial. Having said that there is the potential for conflicts of interest, it should be stressted there is no actual evidence of Pat’s dealings and assets and liabilities affecting his performance.

Maybe Prime Time could investigate….

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The downfall of the dynamic duo’s – Richard Barrett and sidekick Johnny Ronan’s – business empire continues apace with a report than an interim examiner yesterday appointed to Carrylane Limited, the company that owns the Ritz Carlton hotel  in the Powerscourt Estate in county Wicklow. Declan Taite has reportedly been appointed interim examiner and the case is due back in court again on 28th November 2012.

NAMA is one of the creditors to Carrylane Limited being owed €47m, having acquired a €45m-principal loan from IBRC, the €2m difference is presumably accrued interest. It is reported that NAMA hopes to now sell the loan to the operator of the hotel, Ritz Carlton BV Group but the sale was dependent on the appointment of an examiner. It is not reported what NAMA will get for the loan.

The examinership of Carrylane Limited should not affect the operation of the hotel which employs 293 people and which does brisk business in weddings and business conferences. Eyebrows will be raised in the hotel industry at the report yesterday that occupancy at the hotel was just 41% last year.

Carrylane is the developer of the hotel, and makes its money from fees from the operator, Ritz Carlton and also from the sale of suites. The site of the hotel is apparently still owned by the Powerscourt Estate and Carrylane pays €400,000 per annum in rent for the site. Buyers of the suites are reported to have included RTE’s Pat Kenny and Cortina-averse developer, David Agar. Sean Mulryan was also associated with the purchase of two suites at the hotel which reportedly were originally for sale for “up to €2m”.

UPDATE: 27th November, 2012. Brian Carey at the Sunday Times appears closest to this story and reported in last weekend’s paper (not available online without subscription) that NAMA is in fact owed €127m on loans associated with the Ritz Carlton hotel in Powerscourt, comprising €47m owed by Treasury’s Carrylane and a further €80m owed by the Exhort Co-ownership. Brian is being coy about the 157 investors, presumably individuals who comprise the Exhort partnership whose loans were originally from IBRC and he doesn’t name any of them. They are distinct from the 58 investors including RTE’s Pat Kenny who have individually invested in suites at the hotel. Brian says that NAMA “will take a bath” on the loans, though NAMA does expect to dispose of its Carrylane loans to Ritz Carlton, the hotel operator.  However investors including RTE’s Pat face losses on rent already owed and face a bleak future with rent no longer guaranteed on their suites. Of course if the hotel goes bellyup, then the investors might additionally face clawback demands from the Revenue Commissioners.

UPDATE: 28th January, 2013. Yesterday, Brian Carey in the Sunday Times – not available online without a subscription – reported that the “proposed” new owner of the Ritz Carlton, US fund Ranieri Partners has written to the investors in suites at the Powerscourt complex requiring them to accept a 50% reduction in guaranteed rent between now and October 2014 and a 50% reduction in their entitlements after that date also – their entitlements after October 2014 appear to be 75% of the rent received by the hotel operator. For those suite owners – included it is understood and reported in the Sunday Times, radio and TV presenter Pat Kenny – who refuse the offer, they face repudiation of their leases under Irish examinership rules which may lead to clawbacks of tax concessions as well as an uncertain future income.

UPDATE: 4th February 2013. Brian Carey in the Sunday Times – not available online without subscription – continues to keep a close eye on developments in the Ritz Carlton. He reports in yesterday’s edition that 41 of the 80 suite owners have agreed to Ranieri Partner’s offer to reduce guaranteed rents by 50% until October 2014 and also to other reductions post-October 2014. The 39 remaining suites face having their leases repudiated entirely, though they would then be free to offer the suites for rent themselves or club together to market them. It is not known if Pat Kenny is among the 41 or the 39. Ranieri is still not the owner, but the betting is that it will be in the not-too-distant future.

UPDATE: 25th February, 2013. The colourful Ranieri moves a step closer to control of the Ritz Carlton in Powerscourt with the acquisition of NAMA’s €47m of loans which had originally been advanced by INBS to the developer Carrylane Limited. Looks as if Ranieri Real Estate, according to the Sunday Business Post – not available online without a subscription – is getting all its ducks in a row prior to taking full control of the development.

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