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…