THE QUINN Group has defended the continued involvement of businessman Seán Quinn in the conglomerate, in private correspondence with bondholders and banks which are owed about €1.3 billion.
In a six-page response to 13 issues raised by the group’s lenders, accountants BDO, advisers to the group, argued that Mr Quinn and his children, the shareholders of the group, would maximise profits at the business.
The group’s board considered that “a planned withdrawal of the shareholders and Mr Quinn, rather than an immediate disconnect from the business, will result in a fundamentally stronger platform for the Quinn Group in the future and hence enhance value for all stakeholders”, BDO said.
In the letter dated January 10th, 2011, the firm said the board believed Mr Quinn was “integral” to developing and maintaining key customer relationships across the manufacturing operations.
“Mr Quinn and his family have also been instrumental in obtaining access to raw material supplies for the building products divisions at very reasonable prices given the esteem in which they are held in the surrounding areas,” the accountants said in the letter.
The bondholders and bank lenders are engaged in negotiations with the group on the refinancing of almost €1.3 billion of debt which fell due last October.
The bondholders and banks have yet to respond to BDO.
Representatives for the lenders raised queries about Mr Quinn’s involvement in the group in a three-page letter to its financial advisers, dated December 22nd.
UK bank Barclays Capital and London law firm Bingham McCutchen asked BDO to clarify how the interests of the Quinn family and the group would be separated in the running of the group.
“The physical separation and systems and operational separation of the ‘Quinn family’ interests and those of the company and its subsidiaries will be an important issue for the creditors and would need to be implemented at the time of consummation of any restructuring,” they wrote.
BDO said in its letter that Mr Quinn would not be a board member at the group’s main company or any subsidiary but would be an adviser to the board.
The firm outlined Mr Quinn’s central role, saying that local landowners “often insist on having the final ‘handshake’ with Seán Quinn himself” when the group bought land from local farmers for road access, development or raw materials.
Executives at a Japanese supplier to the group “still talk about the meeting with ‘the big boss’ and always appreciate a short meeting with Mr Quinn when they visit Ireland”, BDO said in the letter.
The Quinn family are lobbying to be included in any proposal by Anglo Irish Bank to buy Quinn Insurance out of administration.
Anglo has submitted a joint bid with US insurer Liberty Mutual, although the Quinn family have no involvement in that proposal.
The family believe their proposal, which involves Anglo injecting €650 million into the insurer, will ensure they can repay the €2.8 billion they owe to the State-owned bank within seven years and protect existing jobs in Cavan-Fermanagh.
