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.”
NAMA Wine Lake 
Ahh….. In all modesty, I flagged this on another thread yesterday….. So “I told you so!” :-)
go on then, where did you flag it….
@Howya,
Under the post “Why is IBRC demanding a premium to sell Paddy McKillen’s loans to the Barclay brothers?” as follows:
Ireland hasn’t lost its “Alice in Wonderland” looking glass appeal. Spurious nonsense being pushed out by Rory Godson, Barclays PR man through his mouthpiece Mark Hennessy, “business reporter” in the Irish Times. Why would IBRC sell a fully performing loan asset at a discount? To give support to the Tony Blair appointed “Knights of the Realm” over the Irish taxpayer? Now that would be a scandal!
Rumour on Wall Street is that Paddy has all his money organised to see off this invasion from the perfidious Brits.
And a few quid left over for ties !!!!!!
I see that Rory Godson has been talking to his Facebook pal Mark Hennessy again passing on the information that Quinlan’s allocation is funded:
“However, it is understood the £62 million needed for Mr Quinlan to take part – loaned to him by the Barclay brothers – was lodged last evening.”
Monkey and organ grinders, or puppet and puppeteers?
Interesting that the Irish Times article states that Quinlan did not require approval from NAMA to borrow the £62 million. I really can’t understand how he can get away with this. Looks like NAMA has done a deal with the Barclays – would love to know more about it.
@Sam, as far as I can see, NAMA has no association with Derek Quinlan’s stake in Coroin any more, so if Derek can borrow or be provided with the funds by the Barclays to purchase his allocation of shares, presumably secured on those additional shares, then what business is it of NAMA’s. And NAMA is not maintaining the Quinlans in a very comfortable style in London, in the marathon court case earlier this year, it was conceded by all that the Barclays had given the Quinlans about GBP 4m.
The fact that Derek (Derrick to his very best mates) owns legal title to the shareholding does not necessarily make him the beneficial owner of that shareholding.
Everything indicates that he is holding as nominee for the Barclays.
@wstt – if you are right then Paddy’s pre-emption rights should be triggered and he has the entitlement to buy his portion of Quinlan’s shares to make him the majority shareholder. Sounds like the appeal in February will be very interesting. I still think NAMA must have done a deal with the Barclays and it was not a just a simple matter of selling the debt to them. Again it still makes me ask the same question – will it cost the taxpayer. I see there’s a Panorama programme about the Barclays tomorrow night on BBC just before the last Claridges documentary.
@Sam, for once we might agree. The British High Court decision in August 2012 looked distinctly odd in both tone and content. There were some other thoughts on the judgement here recently.
https://namawinelake.wordpress.com/2012/11/20/paddy-mckillen-facing-wipe-out-at-hotel-group/
@NWL True but they do own hundreds of millions of his other debt. Are the assets there to back the debt that NAMA owns and should McKillen win and get control of the hotels – will this additional debt that Quinlan has taken on to take up his share of the rights issue damage his ability to pay NAMA the money he owes them?
It has now become a very complicated web. Looks like the Barclays now own a very expensive 28% and they also have a very expensive Quinlan to carry on their backs. How long more will they continue to support him for and if they stop supporting him – what are the implications for NAMA and the potential cost to the Irish taxpayer?
@Sam, if Derek Quinlan’s dealings with the hotel group are 100% ringfenced from his other debt, then what difference does it make to the Irish taxpayer? If the Irish Times is correct yesterday then it is the Barclay brothers who are financing Derek in the hotel group, and have financed his lifestyle as revealed in court earlier this year. But no matter how indebted you are, if someone decides to help you out with loans then your other creditors generally can’t touch that.And if you use those loans to acquire assets secured on those loans, then those assets also will tend to lie outside the reach of existing creditors. That may not be the case, but based on my following of the case, it’s my betting as to what is going on here and that the Irish taxpayer has no further exposure to Derek Quinlan’s dealings in Coroin.
@NWL I hope you are correct.
@sam, It is not difficult to hide beneficial ownership behind legal ownership. It is done all the time, especially offshore, and the Barclays do not carrying Derrik for philanthropic purposes.
As I said before, It’s a fine distinction between puppeteers and organ grinders.
@WSTT, let’s hope the Court of Appeal judges recognise that.
Looks like the Barclays have backed themselves into a corner.
Lots of intrigue here. cutting through the legal confusion a couple of points should be made. P Mc K is clearly in a much stronger position now, and if he is to be believed he is paying down his debts at lightening speed, about €400M a year ! If this is true the Barclays have a major headache on their hands. How strong is their hold on Q shares ? C
Not directly to do with this story. BBC’s Panorama showed an interesting programme last night about the Barclay Brothers and their ownership of the Daily Telegraph newspaper. The programme also covered the tax bills for the Littlewoods Chain and the Ritz Hotel London. According to the programme Littlewoods have an ongoing action against HMRC. Fascinating programme if you can get to see it.