Inside the world of business
Funny way to get back at Nama
ONE PROPERTY developer has protested against the much-maligned National Asset Management Agency in a rather curious way.
The UK-based building company Durkan Group, founded by Bill Durkan, complained about its "unsatisfactory" dealings and showed its dissent with the State agency by paying off his group's €43 million in debts in full.
The group said that it had been "left in the invidious and unfortunate predicament of having to engage in a cumbersome, costly and time-consuming exercise".
For the gesture of repaying Nama alone – regardless of whatever criticisms the building firm had about the State agency – Durkan is to be applauded, and other developers should do the same, if they can.
The problem is that many can't. As the most recent actions have shown – Nama taking enforcement action against Seán Dunne and Ray Grehan filing for bankruptcy in the UK over the tightening Nama "noose" – developers have little ability to repay the agency.
Durkan maintained that it had good loans with Anglo Irish Bank and Bank of Ireland, and these were transferred to Nama in 2010.
The group claimed it was forced to move its business elsewhere after it failed to agree a refinancing deal with the agency.
This could be well regarded as good business by Nama. The agency must have known, looking at Durkan's books, that the firm had the financial wherewithal to clear it debts to the agency.
Given that Nama's objective is to reduce its debts within 10 years – and in the shorter term to clear €7.5 billion of its debts by the end of next year – more of this kind of "unsatisfactory" dealing would not be a bad thing for the State.
For the few cash-rich developers, this seems like a clever strategy. But for others who are in a hole with little prospect of securing refinancing from another bank to repay Nama, the agency faces a more complicated strategy.
Ladbrokes keen to ape Betdaq’s net appeal
BOOKMAKER Ladbrokes looks set to sign a technology-sharing deal with Dermot Desmond’s betting exchange, Betdaq.
According to reports, Ladbrokes is likely to buy in pricing and trading expertise from Betdaq to boost its online offering.
Betting exchanges provide an online platform for people to bet against each other in return for a commission on winnings. They have finely tuned pricing technology, and this is what interests Ladbrokes.
This is its third approach to an online player in a year. In 2011, it attempted and dropped takeovers of both Sportingbet and 888.com. It also ran the rule over two other operators.
The Betdaq deal is about technology, and not a takeover. Betdaq’s founder and owner, Desmond, owns 2 per cent of Ladbrokes.
The key issue for the London-listed bookmaker is growing its online business. Its sector sees the internet and mobile as central to growth, particularly since the recession hit bookie shops.
Ladbrokes still depends heavily on that business. A recent note from Morgan Stanley analysts, Vaughan Lewis, Jamie Rollo, Andrea Ferraz and Patrick Wood, says retail accounts for 75 per cent of the group’s earnings before interest and tax. The same note estimates the internet will account for 80 per cent of Paddy Power’s 2011 earnings.
Interestingly, the Morgan Stanley note, which deals with the leisure sector as a whole, and does not compare the two, ranks both stocks as underweight.
One of the reasons is that the British government is likely to try to impose a tax on internet betting in its March budget.
Our own administration has made it clear that it intends – finally – doing the same this year. While there is a question mark over the practicalities, the more cash-starved governments start eyeing internet gambling, the more likely it is that those problems will be overcome, with implications for the sector as a whole.
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