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Archive for October 12th, 2010

Pierse Contracting is seeking examinership

RTE is reporting that Pierse Construction (they probably mean Contracting) is to seek examinership at the High Court this afternoon. RTE refers to “reliable sources” and indeed I had received communication earlier today suggesting an examinership application was imminent. Pierse was founded in 1978 by Ged Pierse who retired from the management of the company in 2005 though he is still chairman. The company directly employs 300 people and has a range of activities which includes property development. It is not known how many subcontractors the group uses but the overall employment generated by the group is substantial. Its 2004 accounts (the latest available from its website show turnover at €317m)

The examinership process is discussed here but in summary if a company can demonstrate an outline plan that might see its business or debts restructured or secure additional funding, the judge may appoint an examiner for 70-100 days during which time creditors can’t generally take any legal action against the company. The hope is that the company can negotiate new funding or restructure its debts/business and carve out a business that can sustain itself. Examinership does not necessarily lead to job losses but employment costs will be examined closely in the context of the company’s finances.

Examinership applications have had mixed results in recent times and there was a growing feeling amongst the legal fraternity that judges were becoming less disposed towards granting protection. However, against the odds I would have said, McInerney Homes secured examinership in September 2010.

Pierse’s developments have included

Bray Town Centre (Wicklow)

Carrickmines Manor (Glenamuck Road, Dublin)

Collaire Court(Callan, Kilkenny)

Eden, Residential Development(Blackrock, Cork)

Gallery Quay Apartments(Dublin)

Marrsfield(Clongriffin)

Santry Cross Hotel and Apartment Development(Dublin)

Shearwater(Kinsale, Co Cork)

Silverglen, (Mountmellick, Co Laois),

Swords Central(Dublin)

The Greens(Thomastown,  Kilkenny)

UCD Student Accommodation (1800 student bedrooms, Dublin)

UPDATE: Both RTE and the Irish Times have reported that John McStay of McStay Luby has been appointed as an interim examiner over two companies – Pierse Contracting and Pierse Building Services (PBS). The company has issued a statement in which it says that it aims to save more than 100 jobs, that it is owed €30m (including apparently €16m from Gannon Homes which is in NAMA). The company has orders of €150m and in the past two years the shareholders have injected €12m. The company is in discussions with an unnamed joint venture partner. Rossa Fanning represented the court at the High Court today. Although RTE refer to an “interim examiner” it is not clear if there will be a further hearing to confirm the examinership. It is also unclear from the reporting how much debts the group has and whether the creditors are supportive or not of the examinership.

User ncallanan on thepropertypin.com has made available what appears to be a company statement.

UPDATE: 13th October, 2010. At least Mary Carolan at the Irish Times provides some useful detail on the examinership. The group has debt of €310m (with €30 million owing  to Bank of Ireland, Bank of Scotland Ireland and Anglo Irish Bank) and expects to have turnover of €100m for the 12 months ending April 2011 with turnover stabilising at the €80m-mark in the following four years. The company has already taken action in reducing its overheads from €19m to €5m. It’s still not known what the reaction of the creditors has been, the identity of the potential third party investor or the outlook for employment at the company or indeed if the examinership is subject to confirmation. The case was dealt with yesterday by Mr Justice Brian McGovern and Pierse was represented by Rossa Fanning. A further Irish Times article says that Pierse presently employs 211 people (down from a peak of 700 and the 300 calimed on the company’s website)

UPDATE: 28th October, 2010. What escaped most reporting of the Pierse examinership two weeks ago was that only interim examinership had been granted. Judges are plainly keeping these proceedings on a short leash and today Pierse were back at the High Court where they were granted a one week extension to provide further information. The judge, the redoubtable Mr Justice Peter Kelly, expressed concern for the company’s perception of its prospects.  Revealing a knowledge and possible patronage of the arts Judge Kelly is reported to have said that quite a few projects in Pierse’s plans involved public monies and he asked, according to RTE, “if there was any reality to money being available for projects such as the redevelopment of the Abbey Theatre when the executive had expressed its intention to introduce a budget involving cutbacks”

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Where is?

(1) The NAMA quarterly report and accounts for the three months ending 30th June, 2010. These were supposed to have been delivered by NAMA to the Department of Finance  on 30th September, 2010. Unless NAMA has failed to prepare its report and accounts (which to stress, relate to a period that ended three months old) then what is the Department of Finance doing sitting on the report – it is after all NAMA’s report approved by NAMA’s board. The first quarterly report was published on 6th/7th of July 2010. The quarterly report was previewed here two weeks ago.

(2) The Ghost Estate (partial) review which Planning Minister Ciaran Cuffe said would be published by the “end of the summer” and then September, 2010. To recap, this partial count was announced in April 2010. It is not by any means a complete stocktake of vacant property in the State and I suspect that when it is published it will be pretty light on the detail of the building and environmental issues connected with the property that is counted.

(3) Legislation to enable a House Price Database (HPD) to be introduced. On 10th August, 2010 Minister for Justice and Law Reform Dermot Ahern seemed to take the reins on this one from Housing Minister Michael Finneran. When the Taoiseach published the legislation to be dealt with in the Autumn session two weeks ago, there was no mention  of an amendment to the Property Services (Regulation) Bill 2009 which would have given effect to a HPD. Enquiries at the Ministry of Justice about the matter have been acknowledged but there has not been any reply. UPDATE: 16th October, 2010. The Department of Justice and Law Reform has now replied to say that the intended legislative vehicle to give effect to the HPD – the Property Services (Regulation) Bill 2009 has completed all stages in the Seanad and is awaiting the second stage in the Dail. What is expected is that the Minister’s amendment to this Bill to give effect to the HPD will be tabled as an amendment prior to the Committee or Report Stages of this Bill. The amendments should be available on the Oireachtas website. The Minister said on 10th August that “he would table amendments to this effect [amending Bill] … during the next Dail session, and would also bring forward any necessary amendments to the Data Protection Acts to facilitate the publication of sale price data by the Authority”. So it seems he has another 60 days to produce the amendments. What most people want to know is when we will have an HPD and how it will operate and what information it will contain. We seem to be far from getting answers to any of these three questions at present.

(4) The Decision (N546/2009) by Competition Commissioner Almunia in respect of Bank of Ireland’s restructuring. The Decision was announced on 15th July, 2010 but has not yet been published as Bank of Ireland, and presumably the Department of Finance are entitled to review the Decision and request redactions for confidential information. At nearly three months, the delay seems unusual. Bank of Ireland is Ireland’s only main bank to remain out of State control (though the State does own 36.5%) but whether that independence has come about through jiggery pokery with not recognising loan losses is unclear.

Are our organs of government (and unless it is the Ministers that are sitting on the documents, it’s going to be the civil service which won’t be changing with any change of government) incapable of delivering anything on time, or in a timely manner?

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This morning sees the continuation of what is a landmark case in Dublin’s High Court where Paddy McKillen is seeking to prevent NAMA getting its claws on his loans from NAMA Participating Institutions (PIs – AIB, Anglo, BoI, EBS, INBS). It is a strange case in many ways with paradoxes

(1) Paddy says his loans aren’t impaired but that some have expired without being paid, and it is said that if the property were sold in the short term, NAMA would suffer 20% losses on the €2.1bn portfolio.

(2) The conception and birth of NAMA has taken well over a year – if Paddy didn’t want his loans to be transferred then why didn’t he re-finance? As recently as August 2010, Paddy seems to have been saying he is “inundated” with expressions of interest in refinancing his assets

(3) For someone worth a relatively modest GBP £66m in 2009 according to the Sunday Times Rich List, an awful lot of effort seems to have been expended in preventing his loans transferring to NAMA.

(4) Paddy says he is a property investor and not a developer

I don’t know what definition of “developer” Paddy has in mind but looking at the planning application to build an additional 40 bedrooms onto his Claridges Hotel (which presently has 203 rooms and suites) certainly looks like development to me. And whilst I haven’t seen estimates of the cost of the proposed development, increasing Claridges room capacity is not going to be cheap, not least because guests may not enjoy the 5-star hotel experience with such major building works ongoing. The application presently before Westminster Council is to restore a previous application and it is understood that the matter will be examined on 14th October, 2010. So who is going to fund this development?

Anglo won’t be engaging in new lending under the proposed wind down scheme presently on its approval journey to the European Commission. Bank of Ireland is the other NAMA lender currently involved with the Maybourne group (the hotel group comprising three 5-star London hotels, Claridges, the Connaught and the Berkeley) and its lending appetite for commercial property development is not known but BoI certainly didn’t feature in a recent Savills survey (from propertyweek.com, free registration may be required) of the very few lending institutions providing property finance at present. Last weekend the Sunday Times reported that NAMA were willing to examine a €675m refinancing of the Maybourne group contingent on an acceptable business plan and usual commercial logic. And NAMA has a development pot of up to €5bn.

So without NAMA, how will Paddy fund the development? And NAMA is the agency that Paddy is fighting tooth-and-nail to defeat in its plans to take over his loans. Another paradox?

UPDATE: 28th October, 2010.  City of Westminister Planning Department has put back their decision to re-instate previously granted planning permission to the 18th November, 2010. Meanwhile Sky News appear to have an exclusive inside track on negotiations between Maybourne and Northwood Investors, headed by John Kukral. It is claimed that Northwood (who appears to be leading a group of investors) has been granted a window of weeks to negotiate a financing package for the group which might also see a GBP £400m refinancing by Deutsche Bank. Northwood had not previously been identified as being in the frame to refinance the group. Westbrook Partners who had previously been associated with the refinancing of the group appear to have dropped out.

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NAMAland, the application

Someone drew my attention to the NAMAland application yesterday, and having previewed the application I must say that it has put a big smile on my face – it’s a clever application for iphones and Android phones and an innovative use of technology. I haven’t seen the application on a real phone yet (will later today) but the indications are that it is a bit special. The creator of the application is Conor McGarrigle and you can find him at www.stunned.org

Conor says that the application is based on the data in the NAMAwinelake developers spreadsheet which you can access here. The spreadsheet was started here back in May 2010 though a couple of weeks ago it caused a bit of an internet sensation (by reference to the modest presence of a blog devoted to NAMA) as it became more widely “discovered” and it took most of one Sunday evening to communicate to those who picked up the link to the spreadsheet about what the spreadsheet information was and wasn’t. This communication was particularly needed after some wild claims were made about the information being leaked, about overt political skulduggery and confusion at  some of the associations shown on the spreadsheet, be they of assets, companies or people. There are a couple of explanatory entries here and here to explain the background and content of the spreadsheet.

I have communicated with Conor and congratulated him on what looks like a very clever piece of work. I have asked him to make clear the description of the information contained in the spreadsheet, mostly for his benefit so that he doesn’t have the distraction of dealing with irate (or litigious) property owners or indeed users/downloaders who might be expecting something different. The application itself is here.

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