Nama feared losing offer for Project Eagle, PAC hears

Nama wanted a quick sale of its Northern Ireland loans because it feared losing an offer for the assets from US company Pimco, according to its agent on the deal.

Patrick Long of UK firm Lazard, which advised Nama on the sale of the loans, dubbed Project Eagle, to US investor Cerberus in April 2014, for €1.6 billion told TDs that the State agency did not believe it could sell the loans in a single deal until Pimco offered it £1.3 billion for them in September 2013.

He acknowledged that keeping this offer alive was part of the reason that Nama wanted an auction with just one round of bids made within a restricted schedule when it put Project Eagle on the market in February 2014.

“While Nama did want to market it, they did not want the consequence of that process to be that they lost the offer from Pimco,” he told Public Accounts Committee member Catherine Murphy of the Social Democrats

Nevertheless, Mr Long said the Project Eagle auction succeeded because the buyer, Cerberus, paid the best price available on the market and surpassed the reserve set by Nama.

Pimco’s offer followed an approach to it from Tuvi Keinan, partner with US law firm Brown Rudnick in the spring of 2013. He introduced the company to Frank Cushnahan, who was a member of Nama’s Northern Ireland Advisory Committee, and Ian Coulter, then head of Belfast solicitors Tughans.

Brown Rudnick sought £15 million from Pimco in February 2014 that was to be shared equally with Mr Coulter and Mr Cushnahan, who had resigned from the Nama committee the previous October.

Preferred bidder

Pimco was the preferred bidder for Project Eagle in March 2014 but left the auction after telling the State agency of the approach. According to Mr Long, neither the company nor Nama told Lazard the real reason for its departure.

Cerberus hired Brown Rudnick and Tughans on March 24th and agreed to pay them £15 million if it succeeded in buying the loans, but only told Nama of this on April 2nd, two days before its bid was accepted.

“I would have vastly preferred if Cerberus would have let us know of its intention to work with Brown Rudnick and Tughans at the time they appointed them, rather than Nama finding out at the 11th hour,” Mr Long said.

Cerberus chief operating officer Mark Neporent told the committee last week that the company did not believe it was breaking Nama’s rules by not telling the agency that it had hired the two law firms.

Mr Long told Fine Gael TD Josepha Madigan that his own firm’s fee, about £4.3 million (€5 million), was only payable if the portfolio was sold and was set at 0.35 per cent of the purchase price.

He told the Public Accounts Committee (PAC) that this approach was “universal” in large-scale asset sales and helped to tie the seller’s agent’s interest to that of its client.

Mr Long is managing director of Lazard financial advisory business and led “six or seven” people from the firm who advised Nama on the Project Eagle sale.

The PAC’s inquiry is based on a report by Comptroller & Auditor General Séamus McCarthy, which questioned the sale process and Nama’s handling of the potential conflict of interest involving Mr Cushnahan.