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

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 18^th 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”