McINERNEY, the house building group that last week sought court protection from its creditors, lost almost €17 million in the first six months of the year.
The High Court last week appointed Billy O’Riordain of PricewaterhouseCoopers as interim examiner to the group’s Irish operations, giving it protection from Irish creditors to whom it owes more than €100 million.
The company is in talks with US-based Oaktree Capital, which is poised to take a stake in the business in return for a €40 million investment. McInerney has already said such a move would “significantly dilute” existing shareholders’ interests.
The group, whose main businesses are in Ireland and Britain, said yesterday sales in the first six months of this year fell 37.5 per cent to €50 million from €80 million during the equivalent period in 2009.
McInerney lost €16.8 million before tax. This included €10.9 million from its actual business and a €5.9 million reduction in the value of its assets. The €5.9 million writedown stemmed mainly from the fact that one of its Spanish divisions, the insolvent Alandi Homes, was placed under the charge of an administrator appointed by that country’s courts earlier this year.
McInerney lost €170 million during the first half of last year, €158 million of which resulted from writing down the values of its main assets, its Irish and British land banks. Its loss per share at the end of June was 8.35 cent, less than one-tenth of the 84.77 cent it lost last year.
The group applied to the Irish and London stock markets to suspend trading in its shares last Thursday, the same day it sought the protection of the High Court from its creditors. Mr O’Riordain was appointed examiner on an interim basis. The case is due back before the court on September 7th for a full hearing. If the court is satisfied that the Irish business has a reasonable chance of survival, then the examiner’s appointment will be finalised.
The examiner will then have a period of up to 100 days to come up with a rescue plan. This will only succeed if no creditor can show they would fare better in a liquidation or receivership and if it has the support of at least one group of creditors. McInerney owes its Irish and British banks €242 million. Finance director Enda Cunningham pointed out yesterday it has been paying off its debts in both countries, but the company is in breach of key covenants, which require it to have a set loan to value ratio.
It has continued to sell houses in both jurisdictions. Mr Cunningham said yesterday it would have sold more if it had access to working capital, which was being squeezed while it negotiated with its banks. It is also working on the possible sale of its Spanish businesses, which include a timeshare club which also operates under the Alandi name.
Former managing director Barry O’Connor expressed an interest in buying this earlier in the year, as did a number of other parties. The company has looked at the proposals and has gone back to potential bidders seeking proof they have the funding.
