ANALYSIS:AFTER SEVERAL months of just drifting along, there is finally some movement in the long-running takeover saga that is Irish Continental Group. Whether it brings a resolution to a process that began almost two years ago remains to be seen, but the board of ICG has at least set a deadline – March 18th – for Moonduster and its own chief executive Eamonn Rothwell to table a bid.
Sources close to the process say progress on funding has been made and the bid consortium is also believed to have held meetings with Liam Carroll.
Carroll is a key player in all of this. He owns 29.24 per cent of the company and reputedly borrowed €200 million from AIB to buy the shares at around €24 a pop in 2007. This loan is thought to be guaranteed against the shares, which are currently trading at €14.75. So either Carroll or AIB would be in line to take a major haircut on that investment. It is understood that Carroll has so far declined to guarantee his support for a bid by Rothwell and Moonduster until a formal bid has been made. But his support is thought likely.
A bid of €20 a share has been floated by sources close to the company. That level, however, seems unlikely to materialise in the current environment, with something between €16 and €17 a share now more likely.
ICG’s shares closed yesterday in Dublin at €14.75. Moonduster and Rothwell are believed to be negotiating with AIB, Bank of Ireland and Bank of Scotland (Ireland) for funding.
It remains to be seen what appetite AIB and Bank of Ireland have to provide debt for a €400 million-plus takeover when every move they make is being scrutinised by politicians, the media and taxpayers.
Based on its full-year results yesterday, ICG looks well-placed to weather the recession. The economic environment is “challenging” and passenger, car and freight volumes will all probably decline this year.
However, actions to radically restructure its cost base a few years ago, amid much public outrage, appear to have worked.
It’s conceivable that ICG could pay off its €48 million debt by the year end or pay a special dividend to investors. It has a modern fleet of ferries and a 50 per cent share of the market on routes across the Irish Sea. Fuel costs have also shrank from last summer’s all-time high.
These are the reasons why Rothwell and Philip Lynch are keen to take over the business.
If they can secure bank funding, then ICG might finally set sail for the private sector.
