There has been speculation “on the street” for over a month about the imminent appointment of receivers to the Clery’’s department store on O’Connell Street and this evening RTE reports that a receiver has indeed been appointed to the company, Guiney and Company Limited, which owns the iconic department store on O’Connell Street.
RTE reports the receivers saying that the store will remain open and it “will be business as usual” but the industry has been that a receivership will allow Clery’s to give notice to the various concessions which operate in the store.
Clery’s has had a long and chequered history, including a period in which it was owned by notorious Dublin businessman William Martin Murphy. It has been in the Guiney family since 1941, survived recessions in the 1950s and 1980s but overplayed its hand in the 2000s when it got into the property development game.
It is believed that the store will now be sold to a Boston investment company called Gordon Brothers. Bank of Ireland is the main banker to Clery’s and it is likely to see a 50% writedown on its loans from the deal. Although we nominally own 15% of Bank of Ireland, we also own €1.5bn of preference shares which if converted to ordinary shares would mean the State owns Bank of Ireland. So it is you and I that lose out from this business collapse, but arguably we incurred the loss when the bottom fell out of the property market. Although Clery’s had property development loans from a NAMA Participating Institution, it is understood that the loans were never acquired by NAMA.
In addition to the receivership at Clery’s, RTE reports that liquidators have been appointed to the Guineys in Dublin city, Leopardstown and Naas which will result in the loss of 29 jobs.
Reblogged this on Tomás Ó Flatharta and commented:
A wake up call for anyone who believes government spin that we are making progress out of the recession
How many more iconic business will go to the wall sacrificed to the wolves in Europe .Whilst the people are forced to pay off the private debts of the corrupt bankers iconic department stores feel the pain as the Irish consumer is all tapped out .This is just the start. We have at least another 3 years of fiscal adjustments in Budgets 2013, 2014, 2015 and perhaps also 2016 all going well that will mean a total of 11.5 Billion to 15 billion will be taken out of our economy and the liars now governing the country will not say where this money is going to come from .One thing is for sure it ant coming from their pockets, pensions or perks! With all this money going out of the domestic economy Property prices are only just getting started on their downward spiral mark my words and we will see civil unrest on the streets!
Spot on. It’s hard to see anything rocket-like happening between now and 2016 either. The bog standard approach taken by FG and Labour of ‘sure something might turn up’ guarantees that nothing will turn up. Remember how that approach went for FF…
Reblogged this on Machholz's Blog.
Older readers will remember that ‘Clery’s Clock’ was a very well known rendezvous for young couples in former times. That was before mobiles, before landlines etc.
Lets hope that as few jobs as possible are lost.
Does Clery’s own its own building,retail week was reporting 14 million on 26 million of debt (apologies subscription only).
http://www.retail-week.com/
The building alone must be worth that,if they own it.
Sorry Joseph, Gordon Bros are a cut throat US based,grave dancer or vulture fund.Initially,it will be ‘voluntary’ redundancies followed by attrition etc. but they are very good at what they do, looks like a planned or staged receivership,with the exit strategy in place,interesting times.
I compared and contrasted Clery’s €26 million debt with Arnott’s 2010 debt €300 million in 2010 elsewhere.
If you recall Arnott’s was carrying a far more sizeable debt relative to it’s balance sheet, than the Clery’s debt.
The banks took control of Arnott’s despite it’s €300 million debt.
http://www.independent.ie/business/irish/whats-in-store-2279875.html
I agree with you with regard to Gordon’s. Vultures is a polite description.
@JG, It is exactly that John. The sale was pre-packaged before the receiver was appointed.
The receiver is just there to remove the concessions – to “tidy up” the asset before the pre-arranged sale.
@JG. P.S. I wonder is this a product of the policy that Irish banks are now pursuing – i.e. sending their hand picked executives to “bully” school, in order to bring in the money necessary to satisfy their requirements to de-leverage their balance sheets. Gone are the days of “relationship” managers. No civility or manners any more just the good cop, bad cop routine to impose their will on unwitting borrowers.
The asset stripping is simply astounding,me thinks you won’t have any banking system left at all,never mind bully boys.
The building alone never mind the iconic name has to be worth that,if I ventured to the north side,the meet was the Easons clock,but Dublin was a lot different back in the day.Maybe,they are all reading A Man in Full,which has some great scenes about bullying bankers,worth a read.Prep you nicely for relocating!
http://www.amazon.com/A-Man-Full-Tom-Wolfe/dp/0374270325
@Gerhard Dengler great link thanks,sad day for Irish owed retailers,new owners won’t be overly sentimental,that’s for sure.If they are smart they will make the employees “partners”,given the basis they now have there should be room in the deal for long serving employees.Hopefully,they expand the business and enhance its operations,prior to exiting via public markets or some special dividend,but…..
One wonders why Irish banks are not exploring fully debt/equity swaps,this is a rounding error for B of I,pity it’s out of Irish hands,with any profits most likely repatriated to US or offshore somewhere.
I think a John Lewis employee partnership structure at Clery’s would be a welcome development.
On the one hand I am surprised that there has been no approach from the Bank of Ireland and other banks with regard to Clery’s. As you say Clery’s landmark site on O’Connell St should have a considerable value. But maybe the Irish banks are in no position to make an approach, even if they wanted to do so??
It is a shame to see this company pass out of Irish ownership.
Clearys now gone what next
We all know what to do the next time the muppets from the Dail come to our doors at election time
Goverment Minsters be forwarned what gies round comes round
Anybody but the Irish!
The accountants would sell their grandmothers at this stage.
The PR machine is a bit see through to say the least.
Vultures! The Grant Thornton tagline of ‘an instinct for growth’ is almost comic if it weren’t so tragic. Other people’s talent, other people’s money…
“Dewy defeats Truman”
http://en.wikipedia.org/wiki/Dewey_Defeats_Truman
“Takeover of Clerys saves 350 jobs”
Ciaran Hancock is a bit excitable for a business journalist,perhaps a tad premature….
http://www.irishtimes.com/newspaper/breaking/2012/0918/breaking1.html
@John, in fairness to Ciaran, he is reproducing the claim first mad e on RTE (by David Murphy?)
http://www.rte.ie/news/2012/0918/almost-350-jobs-saved-in-us-buy-out-of-clerys.html
There is no press release from Gordon Brothers on the transaction yet available on their website, and I would look forward to one , and particularly what it has to say about the 200+ employees at the concessions in the store.
http://www.gordonbrothers.com/
Gordon Brothers (motto: “finding value where others see none”) are smart enough to understand the role of concessions and concession contracts in the success of a retail business like Clery’s and whilst I wouldn’t want to unduly worry the employees, it would be surprising if there weren’t any changes.
@NWL indeed,he does appear to have the habit of repeating any old nonsense verbatim.The article gives the impression that Scoop Hancock,had actually spoken with euro chief exec. of these grave dancers,sorry value players.
So basically its a cut and paste job then.
“Frank Morton, chief executive of Gordon Brothers Europe, said the deal would mark a “fresh start” for Clerys. “We are acutely conscious of and respectful towards its heritage and tradition,” he said.
He added that changes would be required to bring the store on to a “secure and sustainable footing”.
“We will invest in the store and look forward to working with the management, staff, concessionaires and suppliers to review and improve operations, to significantly enhance the offering to customers and build on the many excellent features of the store,” he said.”
“Changes’ now there is a lovely euphemism,these guys are NOT Chuck Feeny,coming home to help out,they are hard nosed players in distressed debt.Actually,quite similar business model to Wilbur Ross,thankfully w/o the Sago Mine disaster in the rear view mirror.
“Wilbur L. Ross Jr. readily accepts the common perception of him as a consummate cost cutter. But he bridles at any suggestion that his focus on the bottom line in any way led to the explosion that killed 12 men in the West Virginia mine that his company owns.”
http://www.nytimes.com/2006/01/05/national/05coal.html?fta=y
Why does the IT not simply state…We here at the IT would like to extend a warm welcome to Gordon Brothers,our advertising dept. will be in touch shortly…
Wonder what the deal ‘terms’ are,was there vendor financing,is it all cash,when can the Irish people after bailing out B of I expect a deal sheet,any terms/conditions negotiated for EMPLOYEES,who after all own B of I.
@ John Gallagher
Wolfe’s ‘A Man in Full’ is a brilliant book and much better than ‘The Bonfire of the Vanities’ (which, incidentally, did give us the phrase ‘Masters of the Universe’ but not ‘Greed is good’). Since the bubble collapsed I have recommended ‘A Man in Full’ to many people as – always a sign of a great literary work – the main character Charlie Croker could be any well-known Irish developer. Croker buys a racehorse with the first loan disbursed on a large real estate development deal and names the horse ‘First Draw’ which really irritates the financiers when the deal later goes sour and they come looking for their money. But it is a rich literary work embracing race politics, real estate, banking and finance, philosophy, sport, hunting, the white underclass, love, lust, etc. I bet anyone could read it now and find a Johnny Ronan, Frank Daly, Enda Farrell, Bernard McNamara, Sean Dunne, Bertie Ahern, Gayle Killilea, Glenda Gilson, etc. in the book.
@Bunbury,fortunate enough to have done a lot of work in the ‘south’,so the book resonates even more.Have had a drink or two at The Atlanta Driving Club,Capital Cities etc.
Completely agree,most of the Irish characters or composites of them,can be found here,the ‘bullying’ banker scenes among my favorite.I actually got to like old Charlie,which I guess is part of the genius of Wolfe.
Living in NY,at the time of “Bonfire” it captured a particular time and place extremely well,but agreed I Prefer A Man in Full.
@JG, Read it when it was first printed and bought it again last year as the characters found new life in recent times in Ireland. Your friend Paddy had never read it so I gave it to him for Christmas :-)
@WSTT send him my warmest regards and best wishes,the sailing in the BWI’s is very good.Rene must have enjoyed the Bitter End bar if he visited when incorporating !
@WSTT apologies that made no sense,was mobile,,the offshore corporation was founded in the British Virgin Islands,that was referenced on other post.Lucky enough to have spent some there,specifically again at a bar ironically called The Bitter End.We might run an oul pencil over that site,more as it evolves,so perhaps a pint on me at his local the Four Seasons!
The austerity budget may strength to a bowl of soup even,but any competent buyer would want to talk to him and Rene,such a waste that Anglo/NAMA won’t utilize the skill set and knowledge of their clients,it does not always have to be antagonistic.
@JG, I’ll get the numbers, John. The original plans were for a different era. They need re-thinking.
P.S. It beggars belief that NAMA does not see the benefit in allowing its debtors to refinance their debt and participate in purchasing at the bottom of the market to allow them to make money in the upturn that will inevitably come. If the proceeds of that upside were shared with NAMA by agreement it would go a long way to help to reduce NAMA’s shortfall. Instead the attitude is to disallow any participation in the market and prevent the current debtors from making money. “Over our dead body,” “Anyone but the current borrowers” etc”.
When I hit my first recession many years back, I went into my banker at the time and told him that I was screwed (or words to that effect). He told me to pidgeon-hole the shortfall, get back to work and find a deal that would repay the bank. It was an enlightened view. One that NAMA sadly lacks to its own detriment. I believe that it is known as “cutting off your nose to spite your face”. Or maybe it is just as you say, antagonism and lack of any practical commercial intelligence.
Unfortunately I don’t think this is going to resemble your first recession. It’s more likely to look like Japan’s 1990s – and 2000s, and still current – recession.
@WSTT no rush NWL will do something later on the current legal situation,looks like it has a while to run yet,but thanks.
You identified the funding “cliff” who is going to lend against Irish RE,who is going to buy it ?
In many situations the most logical buyers are the original developers,benefits the economy too.Overseas investors may have some interest in “trophy” assets with below market financing from NAMA,but that’s hardly a plan or solution.
Unfortunately,I was head of acquisitions and approved a golf course and multi family deal that about two months after closing was dramatically off pro forma.
The seller a well know institution had provided us with,shall we say overly optimistic historic performance numbers.However,the course would have had to been packed day and night instead of the few lost tourists puttering around,I should have caught it.
Submitted resignation letter,was told go out buy some more,the bank and investors did not panic or personalize it.We subsequently purchased many more assets,pooled a few good ones with the dog,sold them and everyone did great.
NY and Toronto are packed with highly talented Irish graduates,it’s not the paddys with the shovels anymore but a whole lost generation of extremely talented,bright and energetic people,who sadly to say despair and despise the current situation in Ireland.
Your favorite ice skating rink will be open shortly,let me know in advance about your next visit,I’m on the road a lot.
American Real Estate Investors Seek Opportunities in European Debt Crisis
Interesting piece from NY Times on Gordon Bros type of investors heading our way.
http://www.nytimes.com/2012/09/19/realestate/commercial/american-real-estate-investors-seek-opportunities-in-europes-debt-crisis.html?_r=1&adxnnl=1&ref=business&adxnnlx=1348046211-nO3BtqJ+3JxF4Dv9Y+GDzQ&gwh=4240255B4FEA420E9881163A7984F8B0
There was a piece in the FT last week about distressed debt investors creating residential mortgage funds in the US. The firm quoted in the peice said it was looking at Europe (Ireland included) but hadn’t committed yet because the bottom hadn’t arrived,