The Supreme Court is expected to rule shortly on a rescue plan, writes BARRY O'HALLORAN
SHAREHOLDERS IN McInerney Holdings plc will receive a letter from chairman Ned Sullivan today telling them that the board proposes to liquidate the construction group’s listed parent, and that there is little or no value left for the equity holders.
The letter states that the board and its advisers believe this is the best course of action. On July 29th, shareholders will have the opportunity to support or oppose the proposal.
McInerney Holdings plc was the parent of three businesses: house-building in the Republic, and in Britain, and a Spanish operation that included a development site and timeshare management.
Miller Construction now owns the British business. It bought it from an administrator appointed by banks owed €90 million.
The company, partly owned by one of the banks, Lloyd’s, paid considerably less than that amount, leaving no surplus for the shareholders.
McInerney sold the Spanish timeshare business to local operator Onagroup for €5.3 million, which was used to clear its debts. The rest of the Spanish division is being dissolved or under the control of court-appointed administrators.
That leaves the Republic. The Supreme Court is expected to rule shortly on a rescue plan, proposed by examiner Bill O’Riordan of Pricewaterhousecoopers, that will determine whether or not this keeps trading.
If it is approved, US fund Oaktree Capital will pay three banks, Anglo Irish, Bank of Ireland and KBC, €25 million to settle a €113 million debt.
It has committed up to a further €23 million to pay other creditors and fund the business.
In return, the fund will get a debt-free house-builder with sites, but no stock, that it believes has a future in the medium term at least. About 100 jobs will be saved.
The new investor will have to deal with some existing McInerney creditors, owed a total of €40 million for allowing the company licence over their property, and the right to acquire it, to build houses.
They will get a small dividend under the rescue plan, and Oaktree will have to negotiate new terms with them.
The US fund was the only interested party to emerge after the group appointed Goldman Sachs to canvass for new backers and advise on a restructuring and recapitalisation in 2009.
If the Supreme Court does not approve the rescue, Anglo and Bank of Ireland’s share of the debt will pass to Nama, and KBC will retain its 20 per cent. Both will have the right to appoint receivers.
