A two-line statement issued yesterday brought to an end the toxic and multilayered row that has been encircling three of London’s most plush hotels since the financial collapse in 2008.
Sirs David and Frederick Barclay, identical twins and billionaires, were selling their 64 per cent interest in Maybourne, the owner of Claridges, the Berkeley and the Connaught, to Constellation Hotels, a Qatari investment vehicle. The statement gave no hint of the bitter recent history of the Barclays' involvement in the hotels, nor did it detail the Irish interest in the properties.
The tale begins with taxman-turned-financier Derek Quinlan, who in 2004 built a consortium of (mostly) wealthy Irish individuals to buy four of London's fanciest hotels – the Savoy was then also included in the group.
Backers
The backers of the €950 million deal, executed through a company called
Coroin
, included Riverdance creators
Moya Doherty
and John McColgan, stockbroker
Kyran McLaughlin
, the English Green family, Quinlan himself and, crucially, Belfast developer, Paddy McKillen. Quinlan and McKillen both controlled a third, with Quinlan securing an agreement whereby his stake could not be sold without his approval.
Furthermore, a pre-emption rule would mean any of the investors who wished to sell would be required to offer their shares to fellow shareholders before going outside.
While the financial weather was still fair, all was well, but by 2009, Quinlan was facing financial difficulties and Doherty and McColgan had sold on their stake, reducing the number of actors on what was to become a bitter stage.
At the end of 2009, Nama moved to take control of Quinlan’s stake and McKillen (then a low-profile but successful developer)began to fight the agency’s attempt to gain control of his shares.
Various negotiations were held in exotic and less exotic locations (including Qatar) over coming months as part of efforts to sell or refinance the hotels before Nama could take over the keys, but cash, and agreements, were hard to secure. By now, the Barclay brothers began to court Quinlan with funds and, as a consequence, turn an increasingly hostile situation into one of irredeemable enmity.
By early 2011, they had mopped up the Green family’s quarter stake – getting around the requirement to offer to other shareholders first by buying the trust holding – and they were about to achieve a similar result with Quinlan’s portion of Coroin. This time, they bought the loans – against which the now cash-strapped financier had provided the hotel shares as collateral – rather than the shares, winning the voting rights they carried without forcing the pre-emption clause. McLaughlin had sold to the Green family trust.
Fury
The drama now shifted to McKillen, whose anger at the prospect of Nama’s involvement was turning into fury at what he saw as the sudden arrival of the Barclays . He kicked off an expensive legal response, challenging the transfer of control over two-thirds of Coroin’s shares to the twins (he owned 36 per cent), as well as Nama’s attempts to gain sway over his €2.1 billion debts with
Bank of Ireland
. He won in the latter instance, but failed in his efforts to beat off the Barclays, at least in the courts. It seems the brothers have been developing itchy feet in recent months, however, possibly motivated by their failure to buy McKillen’s Coroin shareholding via loans he held with the former Anglo.
This was thwarted when US group Colony Capital last year provided backing for the Belfast man, now far from his roots in a family car-exhaust business, to repay €800 million in loans to Anglo that were put up for sale as part of that bank's liquidation.
Yesterday, he finally saw the Barclays’ departure and replacement with Constellation, a friendly group that has backed him in the past.
It is a solution of sorts, but hardly the ending Quinlan’s merry group of Irish investors would have desired when they led their expedition into the London financial establishment during the heyday of the Celtic Tiger.
