ANALYSIS:US investors Oaktree Capital are still keen on McInerney Homes – and the Irish market
McINERNEY HOMES may appeal yesterday’s ruling rejecting the rescue plan for the company drawn up by its examiner, Bill O’Riordan, to the Supreme Court.
In the High Court yesterday, Mr Justice Frank Clarke said he could not allow the rescue plan, which involved offering a syndicate of three banks, Anglo Irish, Bank of Ireland and KBC, €25 million in full settlement of a €113 million secured debt.
The judge said the plan was unfairly prejudicial to the banks’ interests, as they had a realistic chance of realising more than €25 million from an extended receivership that they proposed as an alternative.
Mr Justice Clarke extended the court’s protection for McInerney until Friday to allow the company and the other parties to look at their options.
The company’s directors and Oaktree Capital, the US investment fund that wants to buy the business, were considering those options last night, and it is possible McInerney will seek to appeal the ruling to the Supreme Court.
If it does intend seeking leave to appeal, it will have to go back to the court before Friday, when the protection will be lifted and the banks will be free to appoint their receiver.
Sources last night indicated that the company was seriously considering an appeal and pointed out that it would make sense for it to proceed with this, given that it and Oaktree Capital had come this far.
In his ruling, Mr Justice Clarke said the courts could require secured creditors to accept a discount on their debt in an examiner’s rescue scheme. However, he said that, in this case, the scheme was unfairly skewed against the banks, and refused it on those grounds.
The company will remain under the courts’ protection if it goes ahead with the appeal.
McInerney is in talks with its British banks over the future of the businesses it operates in England, which are profitable, but are in breach of a number of their loan covenants.
The company owes its British banks about €120 million and has been servicing both these and the Irish debts. A development is likely on the British business at some stage over the coming weeks.
Oaktree Capital bid €40 million for both the Irish and British house-building businesses last summer. Along with the €25 million payment to the banks, the fund was prepared to provide a further €5 million in working capital to the group’s Irish business.
Oaktree is still interested in investing in McInerney, which is a public limited company, and in the Republic.
McInerney has more than 100 staff. The future of those jobs is not clear. If the banks succeed in appointing a receiver, they say they will build houses on the company’s sites in the Republic and sell them. It is not known if the banks intend to keep the company’s staff on to aid in this work.
McInerney sought the High Court’s protection and the appointment of O’Riordan as examiner last September. The banks opposed both the examinership and the rescue plan, and claimed that an “extended receivership” would give them a better chance of recovering their money.
