Arnotts-linked property firm in debt talks with Bank of Ireland
Published 02/12/2011 | 05:00
A PROPERTY company linked to Dublin department store Arnotts is in discussions with Bank of Ireland over loans taken out to purchase properties in Henry Street in Dublin city centre.
The company, Choristar, is funded by Arnotts the company, its staff pension fund and loans from Bank of Ireland.
The company has breached its loan-to-value agreements on a debt pile of €29m, although there are no arrears and interest continues to be serviced at present.
Bank of Ireland Private Banking holds the loans and is funding the company on a long-term and short-term basis.
The Arnotts pension fund put €16.8m into the company, and there is also €7.7m of accrued interest on these sums which are payable to the Arnotts staff pension fund.
The loans with Bank of Ireland Private Banking are repayable on demand and Arnotts is hopeful of getting a positive outcome from the debt talks.
It is understood the loans from Bank of Ireland rank ahead of the monies owed to the Arnotts pension fund and to Arnotts the company.
The investment properties are rented out, but the company is seeking to boost the turnover from the sites.
Arnotts itself -- which is now owned by Ulster Bank and IBRC (Anglo Irish Bank) -- is trying to gradually emerge from its own property woes, which ended up triggering the bank takeover of the retailer.
Last July the Nesbitt family, which previously owned a large stake in the store, was effectively sidelined as the banks started to exert majority control.
In its last set of accounts Arnotts revealed an after-tax loss of €295m, after it took writedowns on the Northern Quarter property project promoted by its former chairman Richard Nesbitt. It said the actual store was now trading at far better levels.
The group has bank loans of €282m to service, but both banks have allowed the retailer to defer some of the interest as it tries to trade its way out of trouble. Anglo and Ulster took over the store in August in a debt-for-equity deal.
The results were hugely distorted by the exceptional charge related to the Northern Quarter development. Trading has since turned up, management recently indicated.