The directors of a building group put into receivership after defaulting on a €28 million loan have told the receiver the debt can be brought under control if two flagship construction projects are completed.
The board of Moorview Developments and Salthill Properties has decided not to contest the appointment of a receiver by creditor First Active building society, according to sources.
But the directors say operations could be placed on a sound footing if apartment developments in Malahide, north Co Dublin and Salthill in Galway are finished and put on the market, sources close to the board told The Irish Times.
The receiver, Mr Ray Jackson of KPMG, was reluctant to comment on his plans, saying he needed to fully familiarise himself with the companies' financial records before deciding how to proceed.
First Active insisted the debts are secured and that exposure is minimal. However, some analysts cast doubt on its ability to comfortably absorb such a large default. Merrion Stockbrokers said the revelations confirmed "anecdotal evidence that the company has tended to engage in low-quality commercial lending".
"We do not know to what extent this exposure has been already provisioned by the company, or the degree to which it is expected to be recoverable. The impact for First Active could be material," said analyst Ms Elaine Brownlee.
Moorview and Salthill are owned by builder Mr Brian Cunningham. Their boards, which are identical, were chaired by former Taoiseach Mr Albert Reynolds and included ex-IDA Ireland head Mr Padraic White, who became directors last year.
They were appointed as the companies were about to embark on a number of ambitious apartment developments in north Dublin and Galway.
Moorview's most recent accounts lists Permanent TSB and Ulster Bank as creditors. It is understood to have since discharged its liabilities to Permanent TSB. Ulster Bank declined to comment on the issue.
A spokesman for First Active said fall-out from the collapse of Moorview and Salthill would not jeopardise the improved credit ratings the society was awarded by Moody's, the international rating agency.
Moody's upgraded First Active's short-term rating from Prime 2 to Prime 1 and maintained its long term rating at A3. However the ratings were raised on April 10th, before the building society sought to have Moorview and Salthill placed in receivership. First Active was last upgraded several years ago.
The society also said it has signed a €420 million syndicated loan facility. Launched at €300 million, it had been oversubscribed and scaled back to €420 million. It has been arranged by Barclays Capital, Bayerishce Landesbank, Danske Bank and Royal Bank of Scotland. The three-year facility will be used for general corporate purposes.
