Rejection of Treasury bids 'astonishing'

TREASURY HOLDINGS has described as “astonishing” the rejection by the National Asset Management Agency of two proposals to buy the group’s loans.

Nama “blithely” dismissed the “investment” proposals from Macquarie Corporate and Asset Finance Ltd and Hines, and failed to properly follow up on indications from both groups that those proposals might be improved upon, Michael Collins SC, for Treasury, told the High Court yesterday.

Treasury said Macquarie had offered a “generous” purchase price of €622 million for its loan portfolio while another “more complex” bid from Hines offered “a potential total return” to Nama and the Spencer Dock banking syndicate of some €600 million.

Nama, which acquired some €1.7 billion of Treasury loans in 2010, has argued that neither proposal involved actual “investment” in Treasury but rather required Nama to provide the bulk of the finance for the purchasers to acquire the loans.

The agency had argued, following reviews by itself and PricewaterhouseCoopers, that the proposals were not in the interest of either Nama or the public but would benefit Treasury’s management and shareholders by about €80 million over a period of years, plus annual management fees of several million.

KBC Bank, owed €75 million by Treasury, has also described the proposals as “unworkable” and “unacceptable to any commercial lender”.

Ms Justice Mary Finlay Geoghegan heard final arguments from Mr Collins yesterday in the application by Treasury Holdings and 22 related companies for leave to bring a judicial review to Nama’s decisions last December and January to call in its loans and appoint joint receivers. The judge reserved her decision.

Mr Collins observed that if refused leave, Treasury may raise a constitutional point but indicated that that was a matter for another day.

Treasury claims Nama’s decisions were in breach of its rights to fair procedures, including the right to be heard and to make representations opposing the receivers’ appointment.

In his concluding arguments, Mr Collins argued that following the Supreme Court decision on the successful challenge by property investor Paddy McKillen to the Nama takeover of his loans, Treasury was entitled to an opportunity to make representations before the loans were called in and the receivers appointed.

Treasury, as a group which would be adversely affected by a decision to call in its loans, had a right to be notified of Nama’s intention to make a decision and was also entitled to an opportunity to make representations about the effect of such a decision.

Treasury was also entitled to be provided with information concerning the reasons for the proposed decision so it could make the best case possible against the decision, he said. The manner in which Nama decided to call in the loans and appoint receivers breached those entitlements.

Nama denies Treasury’s claims, contends it engaged extensively with Treasury and was entitled to act as it did on grounds including Treasury’s insolvency and failure to advance acceptable creditor and tax strategies or workable investment proposals.

KBC Bank, in also opposing Treasury being granted leave, said it had lost faith in the management of Treasury and would countenance no alternative to the calling in of Treasury’s loans and appointment of receivers.