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Archive for May 26th, 2011

Just a week after appointing receivers to assets owned by TD Mick Wallace’s M&J Wallace Limited, news this evening that ACC has appointed receivers to Galway-based construction and development company, Cordil Construction Limited. The company was founded in 2000 by Gerry Dillon and Pat Corrigan. Its developments includeFairhill Court (GalwayCity), Dun Eibhir (Furbo, Co Galway) andGalwayWestBusPark (Galway). The company is said to have debts of over €30m of which trade creditors are said to be owed €6m and banks are understood to be owed €21m. Galway News reports that the company employs 51 people directly and more than 400 at subcontractors and has operations inIreland and theUS.

RTE report that the company had previously stopped work on its sites because of credit problems and ”restrictions of Government contracts”. The name of the receiver does not appear in reporting

UPDATE: 1st June, 2011. The Irish Examiner reports that Aengus Burns of Grant Thornton is the receiver. The newspaper carries a report of a statement from Cordil’s Gerry Dillon who said that ACC Bank, a subsidiary of Dutch bank, Rabo had a floating charge over the company’s assets and was owed €5.5m. Cordil has loans from other banks but it was ACC that chose to launch recovery action, according to Gerry.

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The IMF and EU teams seem to be working away quietly on their review mission in Athenswhilst the discussions about new austerity measures and privatisations get louder. There were rumours yesterday evening that the Greek prime minister was considering a referendum on new austerity measures though that seems to have been dismissed today with the claim that he is only seeking “consensus” – remember the prime minister controls 160 of the parliament’s 300 seats so “consensus” is a PR exercise, but it is one advocated by the IMF and EU.

There were small-ish (by Greek standards) demonstrations on the streets yesterday evening when some 20,000 protesters across a number of cities staged peaceful protests. The protests are set to continue this evening. They are differentiated from other Greek protests by being non-union, non-political and are seen as a novel development based on the Spanish protests last weekend. It will be interesting to see if they grow. If the unions organise protests against the latest proposed austerity measures then the government will take that more seriously. Unions are also unhappy with the proposed privatisations and there have been sit-ins at TT Helenic Postbank (equivalent of our Bank of Ireland) and there have been calls for strikes at OTE (equivalent of our Eircom).

A Greek European commissioner broke ranks yesterday and issued a statement that claimed there had been recent discussions at EU-level aboutGreece leaving the euro. Those claims were roundly denied by senior politicians inAthens and by our Finnish friend, Olli Rehn inBrussels. “we either agree with our creditors on a program of tough sacrifices that brings results, and assume the responsibilities for our past, or we return to the drachma” said EU Commissioner for Marine Affairs and Fisheries, the free-thinking Maria Damanaki, in a statement.

German economist and adviser to Angela Merkel’s government, Peter Bofinger has issued an opinion that Greece needs to impose a 40% haircut on its €270bn debt and the rest needs to be converted into what he described as “euro bonds”. Meantime, German finance minister and key player in Greece’s immediate future, Wolfgang Schauble gave a brief interview with German financial newspaper, Die Handelsblatt in which he warned that any Greek default would have dire consequences for the “financial system” and indeed, he compared a Greek default to the collapse of Lehman Brothers in September 2008 which is seen as a major cause of the consequent financial crisis.

There was a claim reported in Reuters that the main focus of current EU efforts is to convince private lenders to Greece whose debts are shortly maturing, to accept new debts in their stead, thereby producing a private sector re-profiling. It is not clear what incentives might be on offer to private sector lenders to extend their exposure to the troubled Greek state. Reuters report Greece’s €270bn of sovereign debt to comprise €50bn owned by Greek banks, €50bn owned by non-Greek banks, €35bn by (presumably non-Greek) insurance companies and €55bn in (presumably non-Greek) pension and other funds – that would still leave another €80bn floating around elsewhere

Jean-Claude Juncker, prime minister of Luxembourgbut more importantly leader of EuroZone finance ministers stated today that the IMF may not release its share of the tranche next month (approximately €4bn) because of an absence of undertakings by Greece or the EU that debt redemptions over the next 12 months will be underwritten. Diplomatic sources in Brussels reportedly told Greek online news outlet Capital.gr “the situation seems desperate but we should bear in mind that that the solutions forGreece,Portugal andIreland had been adopted is such desperate situations, when agreement seemed to be unreachable”

The Greek president, Karolos Papoulias has reportedly invited the leaders of the main political parties to a meeting tomorrow at 12 midday. The meeting is apparently aimed at reaching a national consensus on dealing with the new austerity measures and privatisation programme but that hasn’t prevented rumours that a Greek default or exit from the euro isn’t being privately discussed.

An IMF economist unconnected with the present review mission, Olivier Blanchard speaking in Argentina, said (via Dow Jones Newswires) that Greek’s program was on track, but that Greece would need additional funding beyond the existing bailout because the country would not be able to re-enter the debt markets in mid-2012 as originally planned. Olivier is more relaxed than some Europeans, that a Greek default won’t generate catastrophic contagion.

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