Anglo hoped to sell Quinn’s prized hotels to Quinlan
Published 20/07/2014 | 02:30
ANGLO Irish Bank hoped to sell Sean Quinn’s prized assets to its clients — including property investor Derek Quinlan — in an effort to reduce his debts to the bank, the Sunday Independent can reveal.
Anglo viewed taking control of the Quinn Group of businesses as the “nuclear option”, which would “collapse the whole group”.
The bank also found that getting money from the then billionaire was a problem — even before Mr Quinn and his family made efforts to hide their assets.
Anglo believed Mr Quinn was not making a sufficient effort to raise funds from asset sales.
At the start of 2009, Mr Quinn’s debt to Anglo was €2.75bn, coming from a combination of property borrowing and chasing his losses after gambling on the bank’s share price.
The bank had already given €450m to the Maple 10, who were involved a plan to unravel Mr Quinn’s Anglo share portfolio.
A confidential internal report by the bank dated January 6, 2009, examined proposals to reduce Mr Quinn’s exposure. It concluded the sale, restructure or refinance of the property assets was the “best option”.
“Achieving a sale locally may prove difficult and we need to look within our own client base for solutions, for example we believe Quinlan Private may have an appetite for the Hilton Hotel in Prague and Buswells Hotel in Dublin.”
The internal report — titled a ‘Review of Quinn Group and related transactions’ — was written in January 2009, after the bank had been taken into State hands.
It says: “It is imperative that the Board agree a strategy for dealing with this large exposure and that this strategy is relayed to SQ as soon as possible. One of the key issues for 2009 is to achieve a substantial reduction in the Quinn exposure.”
The start of 2009 was a crucial point as the terms of Mr Quinn’s loan facilities expired on December 31, 2008, and were now all up for review.
Anglo was against giving Mr Quinn an interest roll-up facility, allowing him to use rents from the properties to refinance, and said it was “not a real option”.
“The exposure is too high and cannot be allowed to increase by rolling up interest,” the report says.
Instead, the bank was looking at the sale or restructure of Mr Quinn’s property assets. Anglo financed “attractive property assets” in Ireland, the UK and Europe valued at around €900m.
Mr Quinn saw “strong upside” in the property portfolio, particularly the Russia and Ukraine assets, “which were purchased at very attractive yields”. The bank had allowed him to use the rent from the properties to carry out upgrades and the strategy had worked with strong cash flows. But the bank saw problems getting Mr Quinn to sell.
“Despite his agreement last December to sell a number of these assets to reduce debt, no progress has been made. We believe that he has made no real attempt to sell any of these assets, and is using the current banking crisis and property market correction, to explain the lack of sales,” the report says.
Anglo wanted to “insist” on asset sales and take control if Mr Quinn refused to cooperate. Another possibility was to take control or buy the properties and put them into a private banking property fund, with equity coming from “a number of our high
net worth clients”. “If SQ is willing to dispose of these assets, this could reduce his overall debt to Anglo by circa €800m.”
Anglo also looked at taking control of the Quinn Group of businesses. But the bank concluded this was a “nuclear option”, which would result in other banks being repaid and trigger the appointment of a receiver.
“This would collapse the whole group with all the implications around job losses, publicity, litigation etc and SQ would fight tooth and nail.”