THE PHILIP Lynch-led Moonduster consortium is believed to have received a demand for €11.8 million from London-based investment fund Arkaga as compensation on losses it incurred buying shares in Irish Continental Group (ICG) last year.
It is understood that Arkaga is seeking to enforce the terms of an agreement that it claims it had with Moonduster in relation to these shares. Arkaga claims that it bought the shares as an agent for Moonduster.
If proven, this would make Arkaga and Moonduster concert parties in last year's bitter takeover battle for ferry company ICG and would put them in breach of rule nine of the takeover code. It also would have given them a combined stake of more than 30 per cent, a level that should have triggered an automatic bid for ICG.
It is believed that a letter dated August 27th was sent to Moonduster by Arkaga threatening legal action if a compensation deal was not agreed.
Arkaga is being represented by Dublin-based Lyons Kenny Solicitors while LK Shields Solicitors is acting on behalf of Moonduster.
Moonduster declined to comment when contacted by The Irish Times. No comment was available from Arkaga.
Moonduster comprises the One51 investment group and the Cork-based Doyle shipping company. It owns 25 per cent of ICG.
Arkaga built a stake of 5.17 per cent in ICG through a vehicle called Buchanan Holdings buying shares for more than €24.
Neither Arkaga nor Moonduster has ever disclosed a link between the two parties to the Irish Stock Exchange.
ICG was last year the subject of a long-running takeover battle involving Moonduster and Aella, a vehicle led by the ferry group's chief executive Eamonn Rothwell.
Aella owns 16 per cent of ICG. Property developer Liam Carroll also built a stake of more than 29 per cent in the company.
Neither Aella nor Moonduster could get sufficient support for their bids to succeed and the Takeover Panel put the deal into cold storage last November for a period of 12 months.
Last week, The Irish Timesrevealed that Kevin Beary, managing director of Dolmen Corporate Finance, had written to the Irish Takeover Panel outlining a conversation that he claims he had with a senior representative of Arkaga. Mr Beary alleges that the Arkaga representative told him that the fund had acquired shares in ICG last year through a vehicle called Buchanan Holdings.
According to Mr Beary, the Arkaga director told him that the fund was involved in assisting the Moonduster consortium in its bid for the ferry company, which would have put both parties in breach of takeover rules.
On Tuesday, the Takeover Panel confirmed that it had received a letter from a third party in relation to share dealings last year in ICG and was looking into the matter. It is understood that NCB Stockbrokers wrote to the Takeover Panel earlier this week on behalf of ICG to express its concern at the nature of the allegations that have been made.
While based in London, Arkaga was founded by Irishman Gerard Walsh. It owned Cork City FC until recently, when the soccer club was placed into examinership.
It is understood that George Mitchell, a current director of health insurer Bupa, a former director of HBOS and a former governor of Bank of Scotland, stepped down as executive chairman of Arkaga in recent weeks.
