Following moves by the Barclay brothers last month to call up capital, Paddy McKillen’s spokeswoman has this evening issued a statement confirming that Paddy has already lodged the funds to fully participate in the Coroin rights issue – Coroin is the name of the company which controls the three luxury London hotels, Claridge’s, the Connaught and the Berkeley. The statement makes clear that Paddy will maintain his shareholding and remain the largest shareholder in the Maybourne Hotel group. Not only that, but should Derek Quinlan be unable to raise the funds required to participate in the rights issue, then Paddy stands ready with additional funds in place to take up his pro-rata entitlement to Derek’s shares.
The statement concludes by saying that Paddy is participating in the rights issue to ensure his stake in the group is not diluted but Paddy remains adamant that “the alternative funding opportunity” – presumably this is the Middle Eastern investors, but that isn’t specified in the statement today – remains the best option for the group, but that this opportunity has been rejected by the Barclay brothers’ representatives on the board.
And that concludes the statement.
In other words, ya-boo to the Barclay brothers, their bid to dilute Paddy’s stake in the group by making a capital call has failed because Paddy has, contrary to the apparent expectation of the Barclays, been able to raise the funds.
There is no reference in the statement this evening to precise figures but the news last month was that the capital call would cost Paddy about GBP 53m (€64m) and if Paddy were to take up his pro-rata share of Derek Quinlan’s shares should Derek be unable to participate, then that would be extra tens of millions more.
So, contrary to the Barclay brothers’ lawyers’ suggestions earlier this year, it does in fact seem that Paddy has a pot to pee in. And a very substantial pot at that.
It remains to be seen in 2013 if Paddy is successful at the Supreme Court with his appeal of last August’s High Court judgment which dismissed Paddy’s bid to have the Barclay brothers’ acquisition of certain interests in the hotel declared unlawful.
But the news today confirms that Paddy is very much in the game.
UPDATE: 15th December, 2012. It is reported in the Irish Times today that Paddy is claiming to have paid €40m down on his personal loans from IBRC in recent months and that his personal exposure to IBRC is now “just” €260m. It is also reported that his corporate exposure to IBRC has also been reduced but there is some uncertainty about figures. Earlier this year, it was understood that Paddy’s companies owed €1.3bn to IBRC but the Irish Times is today saying his corporate loans have been cut from €600m to €550m. “His spokeswoman said last night this figure now stood at €260 million and his corporate borrowing had been cut from €600 million to €550 million.” says Mark Hennessy reporting in today’s paper. Furthermore it is reported that Paddy intends paying another €200m down on his corporate debt in coming months. Where is all the cash coming from? Not stated, but the betting is from the US.
We also learn today that Derek Quinlan will be taking up his full allocation of additional shares in the rights issue at Coroin which closes on Monday. So at the end of the rights issue, it seems the status quo has remained for the time being, with Paddy and Derek still owning about 70% and the Barclays owning the remainder with dispute over the control of Derek’s shares set to come back to the Supreme Court in London in February 2013.
UPDATE: 16th December 2012. There isn’t much that is new today in the Sunday Independent’s coverage of the latest developments at Coroin, but there are quotes from Paddy who is typically upbeat about his own and the hotel group’s prospects. Followers of the Quinn saga will contrast the treatment of Sean Quinn who says he undertook to repay IBRC 100c in the euro over seven years with the claim by Paddy that he will repay IBRC 100c in the euro by 2014. Paddy says “Luckily for us, we had invested in quality assets that are very saleable and can be refinanced. IBRC are happy too that we have those assets and that they’re going to get 100 per cent of that money” The actual exposure by Paddy to IBRC remains confused, today the Sindo cites Paddy saying “in the space of 12 months we will have our debt with IBRC reduced by €400m at 100c in the euro.”