A DISPUTE over loan security with their bank prevented the Taggart brothers from bringing up to £70 million of new capital into their construction business and ultimately led to its collapse, according to Michael Taggart, who confirmed at the weekend that he and his brother John are suing Ulster Bank.
The brothers’ construction business, Taggart Holdings, was one of the first high-profile casualties of the property crash when Ulster Bank and Bank of Ireland placed it into administration in Northern Ireland and Britain, and receivership in the Republic in October 2008.
It emerged at the weekend that the brothers are suing Ulster Bank for breach of contract, misrepresentation and a number of other claims.
They claim that the bank acted prematurely and say that they could have traded out of their difficulties.
Ulster Bank refused to comment yesterday on the situation. The bank is taking action against the brothers on foot of personal guarantees they gave in respect of loans to the construction group.
According to Michael Taggart, the group was seeking to recapitalise in mid-2007 to fund a number of acquisitions in the London area, where the Derry-based group wanted to expand.
He said they had offers in the range of £60 million to £70 million for a 40 per cent stake in the business.
However, he said that in June 2007, Ulster Bank contacted the company to say that it was in breach of a term of its loan agreement requiring that the value of its assets remain above a certain level.
Mr Taggart said that he disputed this, and, at the bank’s own request, subsequently engaged consultants to demonstrate that the loan-to-value ratio was 67 per cent, slightly above the figure agreed with the bank.
However, the bank refused to advance part of the remaining £10 million of a loan facility totalling £50 million to the company. The £10 million was to fund work on nine sites in the Republic and the North, many of which were pre-sold, according to Mr Taggart.
Mr Taggart said that its behaviour prevented the company from bringing in new investors and new capital.
He also said that in August 2007 the bank rejected the analysis which showed that the group was not in breach of its loan-to-value agreement, and subsequently sought personal guarantees from him and his brother before advancing more cash to the business.
Mr Taggart said that these guarantees were supposed to be temporary and were only supposed to apply while the company was resolving the dispute over the loan security.
The property developer said that relations with the bank were strained to the point where, at a meeting with Ulster Bank officials in July 2007 he asked if there was an underlying issue with the group. The lender’s staff said there was not.
