BANK OF Ireland has taken control of services group Newcourt, after the company yesterday asked it to appoint a receiver because it failed to restructure its €36 million debt.
Newcourt asked the bank to appoint a receiver to the company and suspended its shares from trading in Dublin and London.
The bank appointed David Carson of Deloitte as receiver to Newcourt and its subsidiary, Sigmar, yesterday afternoon.
A receiver’s main duty is to protect the creditor’s interest and ensure as much as possible of what is owed to them is repaid.
The security, training and recruitment group has been in talks with Bank of Ireland, its main lender, since late last year, in an effort to restructure its debts. Last January it estimated that these were in the region of €36 million.
Newcourt issued a statement yesterday saying that as part of these talks, it completed a review of the options available to restructure its debt and other obligations.
“Following this review and recognising that Newcourt is in breach of certain of its banking covenants, the board has invited the bank to appoint a receiver to the parent company and certain of its sub-holding and non-trading companies,” it said.
It also formally asked the Irish Stock Exchange to suspend its shares from its IEX market and asked London to suspend them from its Alternative Investment Market (AIM). The move seems unlikely to derail a potential management bid for Sigmar, Newcourt’s aviation training and recruitment arm, whose chief executive, Adrian McGennis, recently indicated to the group’s board that he was interested in bidding for that business.
The bank’s spokesman said it would consider any offer for any part of the Newcourt business, including those from management.
Mr Carson said yesterday that one of his priorities would be to establish what possibilities exist to sell shares in any of the subsidiaries. Newcourt said yesterday its objective was to protect its businesses.
A statement confirmed that its subsidiaries, including Sigmar, Federal Security and Acuman Facilities Management, would continue to trade and were not expected to be immediately affected by the process.
Newcourt operates through two basic divisions, support services, which deals with security and facilities management, and recruitment. The company employs 3,200 people.
It floated on both the Dublin and London markets in late 2005, after a period of growth in all its businesses, but deteriorating trade and share price meant it was running into difficulty within the year.
It sold its property and student accommodation arm, Ely, last year. It was expected to record a loss for 2008, but the efforts to restructure its debts meant these were delayed.
