Archive for May 5th, 2013

I feel as if I should be standing up when typing this man’s name – “Sean Reilly”

In today’s Sunday Independent, Tom Lyons reports that “highly intelligent” and “highly respected” developer, Sean Reilly “hopes with his backers to be allowed buy back his loans at a discount of at least €100m” from NAMA. The loans are said to have a par value of €300m which would indicate that Sean “hopes” to buy them from NAMA for €200m.

The report may have some of you scratching the old noggin, thinking, “didn’t Lenny assure us that developers wouldn’t be buying their loans at a discount”. You might be thinking of the statements of former Minister for Finance Brian Lenihan in 2009 when the NAMA Act was being debated that developers wouldn’t just buy back their assets at a discount from NAMA and start over again. And indeed, a proscription on asset sales to defaulting developers made it into section 172 of the NAMA Act.

So, how could Sean Reilly be buying his loans at a €100m discount?

Beats me, because Minister for Finance Michael Noonan was asked this specific question in February 2013 and his response was “I am advised by NAMA that when it approves the sale of any loan or approves the sale of any secured property by a debtor or receiver, it requires a confirmation that the purchaser is not connected to the relevant debtor.  NAMA advises that the term ‘connected’ is widely defined to cover anyone acting on the debtor’s behalf. This is to ensure that the transaction can be truly considered to be at arm’s length.Having ensured, as far as possible, that such primary sales are not made to the relevant debtors or to connected parties, NAMA advises that it has no legal right to intervene in any further future sales of the loan or property in question.”

To the best of my knowledge NAMA has never sold loans back to defaulting developers at a discount – and if a loan has a par value of €300m then to accept less than €300m indicates default. Yes, Donal Mulryan’s loans were sold to Morgan Stanley and Donal became a consultant to Morgan Stanley. And yes, David Courtney is apparently going to act as a consultant to Starwood/Key/Catalyst after the sale of Project Aspen. But, neither is acquiring their own loans back from NAMA.

Maybe something for the “highly intelligent” Sean to consider…

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“DBRS sees NAMA’s efficient operating structure, good revenue stream from investment properties and continued solid realization of value from the property portfolio as underpinning NAMA’s profitability in 2013. Further, DBRS sees Irish property values as staying within a narrow band through 2013, which combined with the noteworthy discounts on the property book, should limit further credit losses and support earnings.” Ratings agency DBRS note on NAMA

Canadian ratings agency, DBRS is generally overshadowed by its more successful troika of competitors – Standard and Poor’s, Fitch and Moody’s – though the NTMA seems to disproportionately refer to DBRS. This week, it issued a briefing note on NAMA. It is available here though free registration is required to access it, it’s contains a large amount of well-assembled facts and figures though there is nothing there that should surprise the regular audience on here. You might take some opinions with a pinch of salt, but ratings agency opinions are of more interest than the norm on here, because they tend to be independent.

DBRS pays NAMA some handsome compliments. It says the Agency has assembled a “talented team” with “deep experience” and with “the necessary skills to extract the best possible return from the loans and underlying property assets”. DBRS goes on to say “NAMA has developed a robust and efficient infrastructure that allows NAMA the flexibility to develop individual responses to each debtor that bests maximizes the returns “

DBRS might be overegging NAMA’s progress with agreeing business plans and a sizable number of developers might take issue with the view expressed that “NAMA continues to actively manage the assets and invest in the assets so to optimize the income producing potential and disposal value of the assets” The sale of the Project Aspen portfolio with 60% staple funding and a 20% equity retention for NAMA in return for diluting its security, was not greeted well on here. The recent move by one of NAMA’s most reputable developers, Sean Mulryan’s Ballymore, to sell a large development site in London’s Docklands also prompts questions about NAMA’s mission to profitably enhance assets with the objective of maximizing returns – here you have a 37 acre site being sold off by one of the few companies which has a proven record of developing such large sites, and you have NAMA snaffling the proceeds so that it can pay down funding which costs it 0.3% per annum – full cost of capital has been recently estimated at 1.5%.

DBRS also notes that the short term outlooks for the Irish property markets are “challenging” though unlike Fitch, Moody’s and S&P, there is no prediction for price changes; it says “DBRS considers NAMA’s credit risk profile as elevated given the concentrated exposure to the Irish property markets, which remain challenged owed to the lack of liquidity, high unemployment, strained rental rolls and weak consumer confidence.” However DBRS notes that NAMA acquired the loans at just 43c in the euro so has some cushioning, though I don’t think DBRS has sufficiently accounted for the 27% and 32% declines in commercial and residential property since NAMA’s valuation date of November 2009.

The note is well worth a read, and at the bottom has a useful three year financial summary of NAMA’s operations.

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“For the avoidance of doubt our client was employed as Area Manager during his tenure at Anglo and did not have any part in the board structure of the organization nor did he have any role in the decision making process…Not only have you sought to denigrate our client’s reputation by incorrectly exaggerating his position at Anglo, you have done so with the deliberate and apparent intention of implying that he is unfit to work as an insolvency practitioner” [ENDS] Letter received on here by email on 1st May 2013 from Northern Ireland solicitors, Johnsons. The letter refers to their client, Neil Adair who was described on here as a former boss of Anglo in Northern Ireland after his tenure from 1995-2005, as head of Anglo’s operation in Northern Ireland, a period which ended with Anglo building up a loan book of almost €1.5bn.

Well, this has been a nerve-fraying week here at NWL with the receipt of its first “solicitors letter”, or rather email. The debut “letter”, the Hayes Solicitors email on Tuesday evening was, to an extent, expected. It sought an undertaking that detailed information, reported in general terms on here the previous day, would not be published. The troublesome information formed part of an affidavit filed in the High Court on Monday and apparently showed that NAMA had provided third parties with details of loans, names, par values and NAMA acquisition values. It is disappointing that NAMA itself didn’t seek such an undertaking, especially as it had been asked for comment on the information the previous day. The undertaking sought by NAMA’s solicitors was readily given, though a complaint was sent to the Data Protection Commissioner with the troublesome information attached. And that is where that matter lies. But like buses, solicitors letters this week arrived in twos.

The second letter was not at all expected, and forms the subject of this weekend’s media blogpost. Firstly, here is the letter.


For those of you unfamiliar with Johnsons, it is a Belfast firm originally, and has developed a considerable reputation in the area of defamation law. Its crown jewel, is solicitor Paul Tweed, pictured below, who has been the figurehead of the firm in a string of defamation actions.


Paul has represented former TD Frank Fahey who won a “six figure sum” against the Daily Mail last year; he’s represented Louis Walsh and won a €500,000 libel claim against the Sun newspaper last year; he even won a case against Ryanair after it was unkind to Chris de Burgh’s daughter. This year, Paul “won” a €50 donation from Tweeter, Kevin Barrington to the (still) Poor Clares and an apology after “a series of tweets” relating to entrepreneur and political activist, Declan Ganley. Most recently, Paul has been representing Paddy McKillen who is on the warpath trying to find out who at IBRC has allegedly leaked details of his loans. Paul has even penned a book on defamation, and Paul is reported to be one the people behind this website which offers a “take down” service to clients to remove “inaccurate or defamatory material”


Paul even finds time to blog on his own website www.paultweed.com.

So, imagine the shock on here, when an email from Johnsons was opened to reveal the letter above, signed simply by “Johnsons” but with a letter reference beginning “PT” – could it be the famous Paul himself who penned it? Possibly not, would Paul go to the trouble of drafting a definition of  “the Website” in the letter, and then not make a single further reference to “the Website” and would Bangor-man, Paul really address a letter to “Dublin, Ireland” which might be considered un-PC in some quarters.

The main subject of the letter was a relatively straightforward blog-post here titled “Anglo boss reinvents himself as insolvency practitioner” which reported that a NAMAed developer and former boss of Anglo Irish Bank in Belfast, Neil Adair – pictured here – was now working as an insolvency practitioner. A search of this blog indicates that there have been five previous blogposts about PBN, not many on a blog which has generated 2,600 blogposts, considering PBN is one of NAMA’s biggest developers in Northern Ireland and Neil had a prominent role in Anglo in Northern Ireland up to 2005 and his co-founder at PBN, Patrick Kearney is reported to be one of the so-called “Maple 10” which was the name given to the group of 10 of Anglo’s customers who accepted loans to buy Sean Quinn’s shares in Anglo.

In the original blogpost, there was a single sentence incorrect statement about Neil being part of Maple 10; that blogpost was posted on Tueday at 12:19 and was corrected here on Tuesday at 18:13 or thereabouts, and not at the behest of Neil Adair or any solicitor, or indeed anyone making a complaint at all. When a mistake is made, it is important to rectify that as sincerely and speedily as possible. Johnsons’s letter was sent at 16:46 on Wednesday and the clarification and apology blogpost was posted here at 17:38. So, a day after the “Maple 10” mistake was rectified, an apology was sought and, as there is no shortage of apologies in the old media, an apology was given in the format used in the recent Irish Times apology to Ronan King following an article by Colm Keena; a fulsome apology was duly provided to Neil Adair as to the Maple 10 error made in the original blogpost.

However, the letter from Johnsons goes much, much further than pointing out an error – albeit one that that had been previously corrected – and seeking an apology; the letter claims that Neil Adair had no decision making role at Anglo. It goes on to state there had been a “deliberate and apparent intention” on here to cause damage to Neil. This is complete and utter rubbish.

As for Neil’s role in Anglo, on his own biography on his employer’s, PJG’s, website, it is stated about Neil, that he “more recently headed up the Northern Ireland operation of a Business Bank” Presumably the “Business Bank” is Anglo, but regardless, there is a plethora of headlines in the old media characterizing Neil’s leading role – for example here and here and here.  And that is aside from underlying reporting, that by 2006, Anglo in Northern Ireland had built up a loan book of €1.5bn, with Neil working with Anglo from 1995-2005. But despite this, the general interpretation of the Johnsons’s letter is that Neil had “no role in the decision making process” at the Northern Ireland Anglo operation. And under threat of “the considerable sum of damages to which he [Neil] is arguably entitled”, there is a demand to remove the entire blogpost.

As for the remainder of the original blogpost, there is no specific challenge by Johnsons to the facts of any claim made. PBN Property Limited recently filed its accounts available here. The accounts are qualified; this is the extract of what the auditors, Maneely McCann say:


PBN Property Limited’s accounts show that the company is balance sheet insolvent, that is, where its liabilities exceed its assets by GBP 4,041,185. This is the balance sheet:


So, the original blogpost, as corrected on Tuesday, is not being taken down. It reports on a man characterized as the boss of Anglo in Northern Ireland for a decade; Anglo is a bank which has cost us across all its operations in all jurisdictions a €29bn bailout; Neil is a man now working as as an insolvency practitioner with a firm offering its services in the UK “and overseas” with Neil’s biography on his website saying he “has substantial experience of working with financially stressed companies in Northern Ireland and the Republic of Ireland” and he is at the helm of one of NAMA’s biggest borrowers in Northern Ireland though he appears to have resigned a directorship in March 2013, and one of the companies in his group, which confirms it is a NAMA borrower, has recently filed auditor-qualified accounts which show the company is balance-sheet insolvent.

This is the mainstay type of reporting for which this blog was established.

And Johnsons Solicitors demand the permanent takedown of the article.

As for some of the details in the letter from Johnsons, the NWL Jagdip Singh has never had an association with Talbot Street in Dublin, Ireland a street in the capital well-known for its zombified heroin addicts; there’s a debt-addicted media company down there somewhere too. A little internet research indicates that the Talbot Street address may have been pulled by Johnsons from the bottom of this website, where a number of people air their views on a NWL blogpost. “Jagdip” is deliberately non-gender specific and, as the blog is anonymously authored, non-cardinal specific too, so the “Dear Sir” is presumptuous on the part of Johnsons, as are other “understandings”.

Having said that, this blog has a solemn duty of care to ensure blogposts contain accurate information – and, in that regard, the amount of fact-checking and hyper-linking to sources on here is backbreaking. But, where a mistake occurs, the rectifying response needs to be swift and sincere and, as for the “Maple 10” error, that is exactly how it was responded to.

The reaction of the blog’s audience to the manner in which the NAMA injunction threat earlier in the week was dealt with, was universally positive, with many, many messages of support, a few donations with messages like “chin up!” and general and specific offers of assistance; however in respect of the second legal letter this week, I know that some of you will be uneasy about the approach taken above, but if this blog is to have a future, it needs to be able to report, in a non-airbrushed fashion, on exactly the subjects such as formed the basis for the blogpost here this week.

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