Well until recently you won’t have been too surprised to have received a notification letter from NAMA. After all, you will have had €20m+ exposures with AIB or Bank of Ireland and/or €5m+ exposures at Anglo or any land and development loan exposures at INBS and EBS. And for the first 170 borrowers you will have had €50m+ total exposures. With NAMA about to take over all €0-20m land and development exposures at AIB and BoI and there being rumour that they will take over all eligible exposures at Anglo, there might be some surprises when the letter from NAMA lands on the doormat.
At its presentation to Chartered Accountants Ireland last week, one of NAMA’s portfolio managers, Kevin Nowlan set out the general process in NAMA for first contact with newly absorbed borrowers. The presentation, jointly given with Michael Flynn from Deloitte (one of the 40-odd companies appointed by NAMA to a panel to provide NAMA with business plan analysis services), concluded with NAMA’s stated aim “Getting Debtors and NAMA working together towards debt reduction quicker and more cost-effectively – understanding each others objectives” which is probably a more realistic assessment than the “taking the stick to them” approach outlined in NAMA presentations to different audiences.
NAMA has recently changed the format of business plans required from developers, with NAMA claiming the new requirements build on the experience of the first few engagements but also being better tailored to smaller-scale developers that comprise the later tranches. The Independent recently reported that NAMA has spent €150-200,000 per business plan on reviews by its panel but that presumably only applied to the larger business plans (the first 30 NAMA developers had an average exposure of €900m and a total of €27bn at par value). The key changes according to NAMA are:
(a) A 10-year timeframe is now envisaged. This is interesting in light of the McInerney examinership presently before the High Court – you might recall that the banks in the McInerney case preferred a 11-year receivership to the scheme of arrangement proposed by McInerney’s examiner. Given that the banks’ loans are NAMA-bound and NAMA had a lifespan that terminates in 2020 but in practice was demanding plans to liquidate loans in 3-5 years, there was a contradiction in the banks’ position and NAMA’s intention. Regardless, if you’re a developer that is NAMA-bound today, NAMA is looking for your projections over 10 years.
(b) You will be required to sign an undertaking as to the accuracy of the information you have provided. So if you are later found to have undeclared assets you may well find yourself in legal hot water.
(c) A focus on unencumbered assets and asset transfers and examination of how these might be used to pay down debts.
The emerging picture from the NAMA acquisition process is that developers that engage constructively with the agency gain advantage. From my own review of the information required it would appear to me that many developers should seek professional advice in completing the business plan template – that would be the natural move with larger-scale developers but with NAMA now hoovering up smaller-scale developers the instinct might be to minimize expense which mighn’t be the best tactic at this stage. Given that NAMA has snaffled 40-odd mostly accounting firms you may find yourself depending on smaller outfits for advice. NAMA has limited funds available as a result of some asset sales and some repayments by existing developers and those funds might be applied to constructive business plans presented by borrowers who actively engage with the agency.
NAMA Wine Lake 
The professional firms want to make all large and small developers feel an obligation to use their services. I strongly disagree with this. Most developers, either large or small should be very capable of preparing their own plan without paying fee to an accountancy firm.
I personally received a letter from one of the big accountancy firms implying that developers should avail of their services to prepare Nama business plans. The logic offered was that they had inside knowledge of the Nama process (by being a service provider to Nama), and this knowledge could very useful in preparing a developers business plan. Basically they were selling the fact that they worked for Nama and were in effect insiders. That sound like double dealing to me and it is wrong.
The tone of the letter was clear. Use a large accountancy firm for your business plan and you will get a better reception from the other large accountancy firms who will be reviewing your plan.
A world entirely run by accountants seems to be their goal, and this is a scary concept. Lets not forget that these guys prepared the accounts for most of the banks, and the large builders and they are up to their neck in the crash.
Have made all that money give GOOD advice on the way up, they now want to make even more money giving more GOOD advice on the way down.
As an aside, most of the partners in these firm also invested in property and are probably exposed to NAMA through personal guarantees.
Now who got the bail out again?
You but it more succinctly than I did, Simon. That is exactly what is happening…. much “nudge, nudge, wink, wink. We can get your business plan approved. Just give us a hundred grand (or more) to prepare it.”
P.S. haven’t read you in the Tribune for the last two weeks. Did they Donald Trump you?