THE NEW management team at State-owned Anglo Irish Bank is reworking its proposed rescue plan for beleaguered Quinn Insurance to join forces with a foreign trade buyer to run the insurer and temporarily share ownership.
Anglo Irish is revising its proposals in an attempt to allay the Financial Regulator’s concerns about its ability to manage the firm by handing over control of the company to a large insurance partner.
Under the plan, which faces significant regulatory hurdles and remains subject to further change, the bank and the outside insurer would share ownership of Quinn Insurance with the insurer eventually taking full ownership of the Cavan-based company over time.
Anglo Irish is seeking to join forces with an established overseas insurance company with no existing operations in Ireland or Britain.
The regulator is concerned about Anglo’s ability to own Quinn Insurance and run the firm on a sound footing when the bank will require up to €22 billion in State funding to stay afloat and has yet to prove its own future viability to the European Commission.
Any proposal from Anglo to take ownership of Quinn Insurance would also have to satisfy strict State aid and competition rules and it must be signed off by the Minister for Finance Brian Lenihan, the bank’s shareholder.
The Financial Regulator has not received a revised rescue proposal for Quinn Insurance from Anglo since last month, although the bank is expected to submit new plans to the regulator in the coming weeks.
Anglo fears that the sale of Quinn Insurance to an outside party will damage the capacity of the Quinn family to repay €2.8 billion in loans owing to the bank.
The Quinn Group has warned that without the insurer, which traditionally accounts for about half the group’s profits, the family will not be able to repay Anglo.
Seán Quinn, the founder of the group, and his wife Patricia stepped down from the board of the Quinn Group last week to avoid any potential conflict in the proposed sale of Quinn Insurance, which is being run by joint administrators.
The group said last week that it was prepared to sell Quinn Insurance as it felt the move was in the best interests of the company.
Anglo has proposed a €700 million bailout of the insurer comprising a €150 million injection to restore it to solvency and a €550 million debt swap to pay off €600 million owing to the group’s bondholders who would be repaid ahead of the bank in a default.
This would improve Anglo’s ranking among the group’s lenders, who are owed €1.2 billion.
Mr Quinn could reach an agreement to sell Quinn Insurance to Anglo but any sale would have to be approved by the High Court-appointed joint administrators, Michael McAteer and Paul McCann of Grant Thornton.
The administrators have been charged with putting the company on a secure financial footing.
Mr McAteer and Mr McCann are preparing an information memorandum for circulation later this month to more than 40 insurance and private equity companies which have expressed an interest in purchasing Quinn Insurance.
Meanwhile, the administrators have extended the deadline of Wednesday, May 19th, for Quinn Insurance’s 2,450 staff to apply for 900 redundancies until Monday, May 24th.
