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“its treatment of Treasury was utterly misleading, unreasonable, commercially sharp to an extraordinary degree”, Treasury Holdings and NAMA – the Treasury affidavits:

February 29, 2012 by namawinelake

The case in Dublin’s Commercial Court between Treasury Holdings and NAMA, and others, continues later today for what will be Day 6 of this preliminary hearing where Treasury is now just seeking a judicial review of its dealings with NAMA, having dropped the application for an injunction against NAMA’s receivers. Yesterday the parties started their closing arguments, and Mary Carolan at the Irish Times has a good report on yesterday’s proceedings which included KBC, which is a notice party in the case, making its contribution. Meanwhile on here, most of the Treasury Holdings affidavits have been obtained and are attached as follows:

Richard Barrett (Group Managing Director, Treasury Holdings) – affidavit here
John Bruder (Managing Director, Treasury) – Part One here and Part Two here
Niall O’Buachalla (Group Finance Director, Treasury Holdings) – affidavit here
and
Michael Cragg (economist, The Brattle group) – affidavit here

So what do we learn? Not surprisingly we get a different perspective on the deals brought to NAMA. Treasury had been, and NAMA alledgedly knew since 8th November 2011 that Treasury had been, in “active and ongoing negotiations” with third party investors, though it is implied that Treasury only told NAMA the names of the investors on 10th January 2012.  Elsewhere Richard Barrett says that it will be “at least 5 years” before any bank resumes development funding in Ireland. Yikes! It is Treasury’s suspicion that NAMA’s QIF initiative indicates that the Agency has its eyes on Treasury’s assets. And any developer out there should read Part Two of John Bruder’s affidavit for a good sense of the detail of NAMA’s interaction with developers on the verge of foreclosure. There will be a separate blogpost on Michael Cragg’s affidavit.

CIM
Richard Barrett describes the CIM deal as “frustrated” and claims it was NAMA’s “inexplicable” raising of the TAIL transaction which scuppered the deal. CIM first approached Treasury in June 2010, and Treasury says that on 3rd March 2011, it received “confirmation that the NAMA board had agreed the term sheet”. On 7th March 2011 NAMA raised the TAIL transaction and demanded it be reversed and CIM subsequently cancelled meetings with Treasury but regardless CIM submitted a new offer in May 2011 after conducting due diligence, and seeing the Irish market was continuing to tank and that Fine Gael’s Alan Shatter was pursuing changes to Upward Only Rent Review leases, the revised offer was much lower.

 

Macquarie
Approached Treasury via NAMA in mid 2011. The deal was comparable with CIM’s according to Treasury given what it claims was a 20% decline in Irish property prices in the 17 months between September 2010 and January 2012. Macquarie offered NAMA 35% of the value of “the development company” but presumably that means 35% of any profit on top of what Macquarie was paying. There is a claim that NAMA was also offered 7.5% on any value realised over €1.2bn.

 

Hines
There is little new detail given on the Hines approach. The negotiations between 10-25th January 2012 are derided as no more than requests for clarifications and Treasury complains at being excluded from interaction between NAMA and Hines.

 

Battersea
Treasury had contacted 220 potential investors, according to Richard Barrett who also believes NAMA acquired the loans for Battersea at a 20% haircut. Treasury say an investment offer from SP Setia had been secured to pay “the full 100% face value” of NAMA loans – elsewhere said to be GBP 124.4m (€147m) with interest accruing daily – but that NAMA/Lloyds decision to appoint administrators in December 2011 scuppered that deal. A swipe is made at Sean Mulryan’s development in adjacentEmbassyGardensin Battersea where Treasury say they “understand that NAMA have chosen to finance an adjoining site which is (sic) less attractive development prospect”.

Treasury’s finances
Allegedly on foot of NAMA’s decision to appoint receivers, “further demands under guarantees totalling hundreds of millions of euro have been served, all of which has the potential to impact on the remainder of the group with the loss of at least 45 jobs in Dublin” (Treasury employs 400 people worldwide, of which 300 are in Ireland). NAMA’s action may impact on the Chinese operation whose assets are owned by “hundreds” of parties, but which are managed by a company owned by Treasury in Dublin. Elsewhere we get an insight into Treasury’s engagement with other creditors which are ranked according to their importance to the business and dealt with accordingly.Bizarrely it seems that as late as December 2011, Treasury had unencumbered income over which NAMA “had sought but not yet taken a charge” REO is now 50.7% owned by Treasury. The company leased or sold 400,000 sq ft of office, retail and residential space in 2011 in addition to selling the 200,000 sq ft Montevetro building in south Dublin docklands to Google.

Interaction with NAMA
Treasury expresses some frustration with NAMA’s processes eg the Agency requires a so-called “Creditor Strategy” from developers but gives no guidance as to what such strategy should contain. Treasury say that changes to their projections in Nov/Dec 2011 came about as a result of what Treasury “was told by NAMA” in respect of accruals and non NAMA debts. So the implication on the NAMA side that Treasury’s abilities caused “considerable alarm” are a “distortion” as far as Treasury is concerned. Treasury’s main beef is that NAMA decided on 6th December 2011 to pull the plug, and indeed that decision might have been committed to even before that. Yet Treasury provided their finalised creditor strategy numbers on 7th December and were given the impression subsequently that the relationship was smoothly proceeding – though not so smoothly that the NAMA CEO didn’t return calls in December. It’s NAMA’s position that the Creditor Strategy was in fact received on 18th November.

The Gossip
Treasury told NAMA in October 2011 that it would need make redundancies but NAMA refused to “deal with this issue until John Ronan repaid money to the Company which he had legitimately received as part of his remuneration” The legendary Form A used by NAMA to approve spending and which is now the stuff of developers’ night terrors are supposed to be dealt with by NAMA in two weeks but, according to Treasury, “in most cases however decisions took very substantially longer than 2 weeks and unfortunately in many cases decisions were never forthcoming despite Form A’s having been submitted as long ago as June 2011”. And in one case, a payment to a supplier, Treasury recently took the decision to pay an invoice without NAMA’s consent because of the time it alleges it takes NAMA to deal with Form As.

The Courts.ie service indicates that affidavits were filed by each of the following, but there are not yet available on here.

DAMIEN REVILLE (IBRC)
EDWARD DILLON (KBC)
DENISE BUCKLEY
RORY WILLIAMS (General Counsel, Treasury group)

And where is, you might ask, the affidavit for the colourful Johnny Ronan? There isn’t one, and you’ll recall that Johnny stepped down from Treasury Holdings in 2010 after his tabloid antics made the headlines. Having said that, he attended what seems like a crucial meeting with NAMA on 8th November 2011 along with Richard Barrett.

I leave you with Richard Barrett’s concluding statement in his affidavit : “Given our impeccable behaviour towards them, the early support and encouragement and my refusal to aid disgruntled NAMA debtors, I would have expected respect and a willingness to proceed and negotiate in a straightforward fashion”

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Posted in Banks, Developers, Irish Property, NAMA | 13 Comments

13 Responses

  1. on February 29, 2012 at 12:59 pm gerhard dengler

    ““Given our impeccable behaviour towards them, the early support and encouragement and my refusal to aid disgruntled NAMA debtors, I would have expected respect and a willingness to proceed and negotiate in a straightforward fashion”

    RB does a nice line in irony.


  2. on February 29, 2012 at 3:55 pm john gallaher

    Is this it?
    Is this it?
    Is this… it?
    The Strokes.

    Given Barrett’s famous mantra…”Certain opponents of ours have underestimated our ability to cause legal chaos to their detriment.” this begs the question and also a great song is this it!
    Assume,he was just too busy to actually swear it in Ireland,saving face in Shanghai,where it was sworn.

    The claim about the ‘management platform ‘ is risible,its a commercial enterprise,sole purpose is the further enrichment of founders and senior executives.

    Regarding the lack of R E S P E C T comments from Barrett,well they may be a tiny bit disappointed that off the 1.7BILLION in loans NAMA inherited,they are facing a 1BILLION loss,they advanced 100,000,000 that’s way,way too much respect.In fact its borderline negligent, definitively incompetent.


  3. on February 29, 2012 at 4:40 pm john gallaher

    Another,hard hitting in debt investigative,well researched,balanced,devastating ‘journalism’ from Ronald Quinlan!

    “Armed with information in relation to Treasury’s dealings with Nama in the months leading up to the final breakdown of relations last month, Dr Cragg is understood to have compiled a devastating critique of the agency and the strategy it employed in Treasury’s case.”
    http://www.independent.ie/national-news/nama-will-be-in-dock-at-treasury-court-case-3024313.html

    What a hack,is Hello or VIP hiring.Having,taken the time,which clearly Quinlan did not to read the good Doctors,nonsense,I promptly tossed in it the garbage where it belongs.

    Funds,must be running very low,if this is their ‘expert witness’,noticed NWL did not even consider it worthy of comment,agreed.Lets,hope they are unsecured creditors, Brattle Group take your place at the back of the line.Quinlan and Indo trying actually reading the material before launching a polemic against NAMA.


    • on February 29, 2012 at 4:44 pm namawinelake

      @John, the Michael Cragg affidavit which considers the big picture in which NAMA operates with developers will be the subject of a separate blogpost. The affidavit seems similar to the one produced by Michael Cragg in the Paddy McKillen case at the High Court in Dublin in October 2010. But yes, there was no Nobel prize-winning economist engaged here as Paddy McKillen had in his own case when he secured a statement from Joseph Stiglitz.


  4. on February 29, 2012 at 4:50 pm john gallaher

    @ apologies again,you may have mentioned that !
    Why retain Stiglitz when clearly you have Quinlan,on your side.Few more to read,got the update,liked NAMA’s position regarding getting some security,as reported in IT,nice work Frank and Brendan,sadly it took 100,000,000 to arrive at this position !


  5. on February 29, 2012 at 5:09 pm BarryT

    What happens the haircut? Is the difference between the par value of the loans and the NAMA purchase price just now gone?


    • on February 29, 2012 at 5:32 pm John gallaher

      “One London developer described the pair as “the only financially sophisticated developers in Nama – with [virtually] no personal guarantees or borrowings who did everything on a corporate structure ”
      That’s not how I read the REO,docs but the asset values have plummeted,recovery above beyond that dependant upon net worth of any guarantors.
      http://m.guardian.co.uk/business/2011/dec/20/irish-property-developers-battersea-power-station?cat=business&type=article


    • on February 29, 2012 at 8:41 pm who_shot_the_tiger

      I’m afraid that there is going to be a bald patch. Like last winter’s snow. The difference has disappeared.


  6. on February 29, 2012 at 5:17 pm John gallaher

    @BT not at all,respect is a mutual thing,out of respect to the Irish Taxpayers and fawning media,the founders decided to do the right thing.They have consistently declined to provide any funding or equity.
    It will all depend on what guarantees were provided,but assume NAMA enhanced its security,right,no way they advanced .100,000,000 to a hopeless insolvent company,the head of lending would have to go…..oh hold on he did!
    Best case,maybe,loss of a BILLION,on loans in NAMA,gone pissed away…..


  7. on February 29, 2012 at 8:05 pm John gallaher

    “And where is, you might ask, the affidavit for the colourful Johnny Ronan? There isn’t one, and you’ll recall that Johnny stepped down from Treasury Holdings in 2010 after his tabloid antics made the headlines. Having said that, he attended what seems like a crucial meeting with NAMA on 8th November 2011 along with Richard Barrett.”

    This is just completly unprofessional,illustrates a complete and total disregard for his employees and lenders.Up to his neck in debt and can’t be bothered to prepare an affidavit.He is also the largest unit holder in that China gig,TCT,attended the opening of this,that and the other,but no affidavit.What a businessman,jobs on the line,loyal employees stressed out,lenders running out of paitence him acting the gobshite as usual,well Ronan where’s your affidavit,saving it for your personal borrowings.


  8. on March 1, 2012 at 1:47 pm Patrick

    Find it strange that JR is not involved in above,Yet he seems to be present at Key meetings mentioned in other Affidavits.Wonder why??


  9. on March 1, 2012 at 4:06 pm john gallaher

    @Patrick,just as odd was Barrett’s,it was ‘sworn’ or so it says in ehmmm Shanghai,Peoples Republic of China.Sworn and filed on same day too,must be a fax or something.
    It’s a 1,7BILLION loan book that’s in dispute,had no idea the Irish courts accepted and recognized, affidavits from such far way and exotic places.Say,for example,an error or omission,what laws would govern or prevail,assume they have filed the original by now,but not a legal expert.
    Hope,he paid a ‘fee’ for taking up the time and resources of the Consul General.


  10. on March 1, 2012 at 5:20 pm Patrick

    Maybe of Interest

    http://www.donegaldaily.com/2012/03/01/revealed-letterkenny-retail-park-goes-into-administration/

    Possible NAMA involvement



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