Treasury Holdings has described as “astonishing” the rejection by the National Assets Management Agency (Nama) of two separate proposals to buy the group’s loans from Nama.
Nama “blithely” dismissed the “investment” proposals from MacQuarie Corporate and Asset Finance Ltd and Hines and failed to properly follow up on indications from both groups those proposals might be improved upon, Michael Collins SC, for Treasury, told the High Court today.
Treasury said Macquarie had offered a “generous” purchase price of €622 million for its loan portfolio while another “more complex” bid from Hines offered “a potential total return” to Nama and the Spencer Dock banking syndicate of some €600 million. It also claims there were indications from both parties their bids might be improved upon.
Nama, which acquired some €1.7 billion of Treasury loans in 2010, has argued neither proposal involved actual “investment” in Treasury but rather required Nama to provide the bulk of the finance for Macquarie and Hines to acquire the Nama loans.
The agency had argued, following reviews by itself and PricewaterhouseCoooper, the proposals were not in the interest of either Nama or the public but would benefit Treasury’s management and shareholders by about €80 million over a period of years, plus annual management fees of several million.
The proposals would require Nama to finance the loan purchase via deferred consideration for the loans with relatively small upfront cash payments by both Macquarie and Hines, Nama said. Under both proposals, the proposed consideration was significantly less than the debt owing to Nama, it added.
KBC Bank, owed €75 million by Treasury, has also described the proposals as “unworkable” and “unacceptable to any commercial lender”.
Ms Justice Mary Finlay Geoghegan heard final arguments from Mr Collins today in the application by Treasury Holdings and 22 related companies for leave to bring a judicial review challenge to Nama’s decisions last December and January to call in its loans and appoint joint receivers.
The hearing concluded after six days, and the judge reserved her decision. Mr Collins observed, if refused leave, Treasury may raise a constitutional point but indicated that was a matter for another day.
Treasury claims Nama’s decisions to call in the loans and appoint joint receivers over its assets here were made in breach of its rights to fair procedures, including the right to be heard and to make representations opposing the receivers' appointment.
In his concluding arguments, Mr Collins argued, following the Supreme Court decision on the successful challenge by property investor Paddy McKillen to the Nama takeover of his loans, Treasury was entitled to an opportunity to make representations before the loans were called in and the receivers appointed.
Treasury, as a group that would be very adversely affected by a decision to call in its loans, had a right to be notified of Nama’s intention to make a decision and was also entitled to an opportunity to make representations about the effect of such a decision, the court was told.
Treasury was also entitled to be provided with information concerning the reasons for the proposed decision so it could make the best case possible against the decision, he said. However, the manner in which the Nama board decided to call in the loans on December 8th and later decided in January to appoint receivers breached those entitlements, Mr Collins said.
Nama had also failed to give Treasury a proper opportunity to address Nama’s concerns about the strategy advanced by Treasury to deal with its trade creditors and with tax issues, he said.
The defects in the process carried out by Nama raised substantial issues entitling Treasury to be granted leave to bring the judicial review challenge, he argued.
Nama denies Treasury’s claims, contends it engaged extensively with Treasury and was entitled to act as it did on grounds including Treasury’s insolvency and failure to advance acceptable creditor and tax strategies or workable investment proposals.
KBC Bank, in also opposing Treasury being granted leave, said it had lost faith in the management of Treasury and would countenance no alternative to the calling in of Treasury’s loans and appointment of receivers.
