OPINION:It would be a travesty if Nama bought a bank loan that was part of the Irish Ferries fiasco

THE BATTLE for Irish Continental Group will surely go down as one of the biggest corporate misadventures in Irish history. The amount of wealth that has been destroyed in this one episode is stunning. Shares in the group were pushed up over €26 – a level that bore no relation to the fundamental value of the underlying transport business – as some of the State’s best-known businessmen tried to gain control of its 35-acre landbank in Dublin’s docks.

That is all history, but accounts filed last week for one of the protagonists indicates just how much damage has been done. Rambone Ltd, the vehicle of the Moonduster consortium, spent €140 million acquiring a 24.29 per cent stake. Last year it wrote off €30 million of this, but there is worse to come. With the shares now around €13, its full write off will be about 50 per cent.

The losses incurred by the other protagonists are less clear. Liam Carroll, the bankrupt property investor, is believed to have spent €200 million, most of it borrowed from AIB to buy his 29.3 cent stake. He too must be facing losses of 50 per cent as his shares were also acquired over the last three years.

Eamonn Rothwell, the ICG chief executive whose attempt to take the company private triggered the bidding war, is in a better position. Most of his 16 per cent stake predates the launch of his buyout and must have been acquired at prices much closer to if not well below the €13 range that the shares are trading at now.

Leaving Rothwell out of it, the losses associated with the ICG takeover battle are somewhere north of €160 million. And the most interesting question is whose money was it? Answer: the banks’.

What is clear from the Rambone accounts and from the evidence given in court in connection with the collapse of Liam Carroll’s empire is that the banks appear to have funded the battle for ICG with the same gay abandon adopted towards the property market. The belief that there was some pot of gold in the form of ICG’s landbank no doubt was a factor.

Rambone is a joint venture between the Philip Lynch-led One Fifty One and Cork-based Doyle Shipping. Both borrowed money, via subsidiaries, which then lent money to Rambone to buy ICG shares. One Fifty One borrowed from Bank of Scotland Ireland and Doyle Shipping from Bank of Ireland. The amount of the bank loans is not disclosed.

According to the Rambone accounts One Fifty One and Doyle have said that they “will not seek repayment of this loan before 2010 or until such time as the company can repay the loan from its own resources”. But clearly there is a meter clocking up the interest in the money lent to One Fifty One and Doyle Shipping by Bank of Scotland Ireland and Bank of Ireland.

Documents lodged in the High Court to support Carroll’s attempt to secure court protection for his Zoe property group also shed light on how his shareholding was funded through the banks. Carroll received a €7.2 million dividend in 2009 on his ICG shares, which, according to the documents, is “sufficient to discharge the interest cost on the underlying loan facility” from AIB which is reported to be €200 million.

Interestingly, Rambone does not use its dividends to repay interest and the approximately €1 million it received in 2008 was left in the company.

The size of the borrowings taken out by the protagonists in the battle for ICG and the collapse in the value of the underlying asset no doubt played a part in the unsuccessful efforts by Carroll to sell his shares to Rothwell and Moonduster earlier this year.

The realisation that the dividend was going to come under pressure – earnings per share for 2009 are forecast to be only half of the 40 cents achieved in 2008 – focused the minds of all involved.

Events have now been overtaken somewhat. South Morston, the vehicle through which Carroll holds his shares in ICG, is now in receivership. The stake is now presumably on the market, but any prospective buyer will have difficulty raising finance here given the extent to which some banks are exposed.

In the absence of a buyer, the temptation may be for AIB to try to sell the South Morston loan to Nama on the basis that ICG was a property play and the whole thing is wrapped up in the Zoe Group. Not great for ICG. A travesty for the taxpayer.