Developer Gerry Gannon – remember he’s the one in the fedora who was last seen on TV with the missus stuffing the Brown Thomas bags into the back of a silver Range Rover – is reputedly one of NAMA’s Top 10 developers and his loans were acquired by the Agency in early 2010. One of his highest profile developments is the K Club in county Kildare, the world-class hotel and golf resort which also has significant residential property development – the history of the K Club is chronicled here together with details of residential development and the well-heeled buyers. Gerry is understood to have a 49% stake in the K Club with the remaining 51% owned by packaging tycoon Michael Smurfit. Gerry’s stake has been on the market since June 2010, with a price tag of €60m. In January 2011, it was reported that the owner of the remaining 51% stake, Michael Smurfit was interested in buying Gerry’s 49% stake through NAMA but “no figure has been put on the table and Dr Smurfit is waiting for a response from NAMA but they have yet to get back to him” Fast forward one year, and credible sources say that the sale of the stake has been agreed, that Michael Smurfit is indeed the buyer and wait for it, the price is understood to be just €10m.
NAMA and the K Club were asked for comment on the transaction, and none has been forthcoming. If confirmed, and remembering that Michael Smurfit would be classed as a “special purchaser” because he presumably has great interest in who his partner(s) will be and might therefore have been expected to pay a premium on top of the open market value of the stake, the price will certainly raise eyebrows, and the sale will attract questions about the 2010 valuation and what has caused the collapse in price since.
There is also another angle of concern if this transaction is confirmed. By any standard, Michael Smurfit has been a business associate of Gerry Gannon, they’ve been in business together in the K Club since 2005. NAMA faces legislative restrictions in its choice of buyer. Remember the brouhaha last summer when Enda Kenny gaffed in front of the British Irish parliamentary party meeting in Cork and suggested shenanigans in NAMA’s sales which prompted this reassurance from the NAMA chairman a couple of days later that “in the case of property which is being sold by a receiver acting for NAMA, a purchaser is asked to make a sworn declaration that he is an independent third party purchaser not connected in any way whatsoever with the vendor”
Michael Smurfit’s company Smurfit Kappa bought its leased offices in Clonskeagh last year in a €8m-transaction overseen by NAMA, so the man obviously has a relationship with the Agency but has NAMA broken its own rules by apparently agreeing the sale of the K Club stake? NAMA is not saying.
UPDATE: 23rd April, 2012. Press reporting claiming the sale of Gerry Gannon’s share in the club was concluded on Friday last 20th April, 2012.
UPDATE: 4th May, 2012. Both the Irish Times and Independent report that the stake was bought in a deal worth €40m.
NAMA Wine Lake 
I wonder has the NAMA people had a look at the Encumbered Estates Acts of 1848 and 1849.
Can we start shooting yet?
Shall we try shouting first.
This transaction alone illustrates the need for more transparency at NAMA.
€10m valuation for Gannon’s K-Club stake is a long way 2010 €60m valuation.
What steps are NAMA taking to recoup the full amount of money borrowed by Gannon to purchase his K-Club stake (NAMA will pursue all borrowers for the full amount of all loans with the banks)?
but surely that is just about what it is actually worth now…it was never worth €60M
Just hitting the wires. Suggesting its not a done deal as of yet.
*SMURFIT IN TALKS ON GANNON STAKE IN K-CLUB, SPOKESWOMAN SAYS
*SMURFIT SPOKESWOMAN SAYS TALKS ON K-CLUB ONGOING
If John B. Keane had written about mid-1990s Moscow…
This article from Aug-10 describes:
“The company behind the club, Bishopscourt Investments, is hoping to defer repaying a bank loan of €55m.
Projections
The company’s accounts said: “Based on projections, the group expects to incur further operating losses in the period to June 30, 2011.”
The accounts cover the year ended 2008, but the directors provide an update, saying the economy could prevent the company from getting further bank loans or other funding.
Dr Smurfit holds 51pc of the shares, with the remainder owned by Mr Gannon. Dr Smurfit could not be reached at his offices in Monaco yesterday.
KPMG, the auditors to the company, included an “adverse opinion” on the company, pointing out that while the property assets at the K Club are worth €96.1m, no valuation has been done on these assets during the period, and no provisions have been made for potential writedowns.”
http://www.independent.ie/business/irish/k-club-seeks-to-defer-bank-loans-due-to-crippling-losses-2301126.html
So, it’s not clear to me what a €10m purchase relates to? Or where the €60m valuation comes from. If Smurfit buys Gannon’s shares, this should mean Smurfit now owns the assets AND liabilities (including the 55M debt mentioned in the indo article) relating to the K Club.
@Ahura M
“If Smurfit buys Gannon’s shares, this should mean Smurfit now owns the assets AND liabilities (including the 55M debt mentioned in the indo article) relating to the K Club.”
That’s what I would term wishful thinking. Do you really believe that there is €10 million of equity available above the current borrowings on a 50% shareholding?
Too true. I’m not expecting the good doctor to take one for the team. I’m querying what the €10m gets Dr Smurfit.
Assuming the holding company’s liablilities are much greater than its assets, the value of Smurfit’s 51% is worthless. So the description of “Smurfit buys Gannon’s 49% stake for 10m” needs some context.
Is Smurfit buying the holding companies debts for 10m in return for Gannon’s shares? If so, I don’t see why NAMA didn’t repossess and market this in the US. The chance to own a Ryder Cup club might attract some interest over there.
“Whatever Nama decides, sources close to the matter firmly believe that the State agency is highly reluctant to become involved in any partnership venture at the K Club.
“Nama is either going to sell Gerry Gannon’s share to Michael Smurfit or to some other party entirely. One thing is certain though, they’re not in the K Club for the long haul. They could even manage to put the club into receivership given that there’s a €50m bank loan repayable on demand,” a club source said.
Indeed, the uncertainty created by that bank loan is acknowledged in the latest available accounts for Bishopscourt Investments, the company that owns and controls the K Club.
According to these, Bishopscourt had its €55m bank loan transferred over to Nama in 2010. The borrowings were noted as being repayable on demand as Bishopscourt failed to meet interest and capital repayments on them”
“Dr Smurfit and Mr Gannon bought the Kildare golf club in June 2005 from the then Jefferson Smurfit Group for €115m.”
http://www.independent.ie/national-news/tensions-hit-new-heights-at-k-club-over-nama-talks-2940185.html
Interesting how it’s only Mulryan and Smurfit who have made it into Nama’s good books these days, and Smurfit was on Mulryans board, was his good friend, and was known to have no time for Gannon. Then again, if the 10m purchase story is true, no one else but Smurfit would have invested one red cent in the K Club. And he did develop the place from scratch. It’s nice to hear for once that Nama did not put the whole place into receivership out of some kind of spite for the likes of Smurfit or Gannon. However, Smurfit is said to have personal guarantees on his own loans on the K Club with Nama banks (Irish Nationwide). Maybe this is not the case, but as said here lack of transparency in Nama is starting to make everything seem Putiniesque. It seems to me that if Treasury Holdings look for serious discovery in their upcoming case against Nama on how they have been treated, and how say Mulryan’s Ballymore has been treated, and what exactly happened in this Smurfit dela, they might have a good case.
Perhaps we are just waiting to have some fun,with the good doctor.
In fact some of us remember how obnoxious he was and is,with the offshore residency,it’s early days yet.The fun and games are just beginning.
Gannon may be beneath some of us,Michael and Norma may be on the menu,Sean definitely is.
Noel Smyth this quarter,probably move on Sean in summer.
Word is that agreement on this deal will be announced within a couple of days. If so it will be an example of NAMA selling to a connected party. as it is rumoured that the good doctor guaranteed some of Gannon’s loan – he has already been paying the shortfall in Gannon’s expenses. It will be interesting to see how this purchase is structured. Will an independent vehicle be used? A possible fudge factor to hide NAMA’s blushes?