Bank props up chairman Pratt's ailing Uniphar
Two BoS(I) directors own shares in troubled firm
Published 14/02/2010 | 05:00
BANK of Scotland (Ireland) chairman Maurice Pratt and board member Michael Quinn are both directors and shareholders in troubled pharmacy group Uniphar, which has been kept afloat by the bank.
Last week, Bank of Scotland announced that it was slashing 750 jobs and shuttering its retail operation Halifax, as its €12bn property and construction loan book turned bad.
Lloyds Banking Group, which owns Bank of scotland, has pumped €3.5bn into the bank in recent months. The bank had financed some of the most high-profile and high-priced deals at the peak of the property boom, including Bernard McNamara's €288m buyout of the Burlington.
Bank of Scotland's financial meltdown has not been helped by the crisis unfolding at Uniphar. The chemist company's latest annual report reveals that it was in breach of its banking covenants at the end of 2008. Bank of Scotland (Ireland) and Ulster Bank were the firm's main lenders. Under the terms of the covenants, the banks were entitled to seek immediate repayment of these loans if these covenants were breached. This did not happen and the loans were restructured. At the end of 2008, Uniphar had bank loans of €103m. The repayment date for some of its bank lending was extended to the end of 2010. Uniphar had hired Goodbody Corporate Finance to advise it on its financial situation.
"We can't discuss matters in relation to Uniphar because of client confidentiality. However, in a general sense, we can confirm that there have been no instances of conflict of interest on the board of Bank of Scotland (Ireland). If any such instances were to occur, the relevant director would absent themselves from the board discussion in line with the bank's conflict of interest policy," according to a bank spokesman.
Bank of Scotland sources told the Sunday Independent that its chairman, Maurice Pratt, had no involvement within the bank with the restructuring of the Uniphar loans. Uniphar loans were not discussed at board level, according to sources.
Documents seen by the Sunday Independent show that Mr Pratt held almost 41,000 Uniphar shares, with Mr Quinn owning 40,000 shares at the end of 2008.
Directors at the company share pay and fees of €730,000. Mr Pratt became acting chairman of Uniphar in May 2009. Both men held shares in HBOS before it merged with Lloyds. It is thought that Mr Pratt is paid about €150,000 in his role as chairman.
Uniphar's situation deteriorated last week, as the Independent Pharmacy Ownership Scheme (IPOS), which it backed, collapsed. The scheme was set up to help pharmacists buy and operate their own chemist shops. Four IPOS funds bankrolled 147 chemist buyouts around the country.
Last Thursday, it emerged that KPMG insolvency specialist Kieran Wallace is to be installed as liquidator of all four IPOS funds this week.
Uniphar has already reported losses of €87m in 2008 after taking a €98m hit on its IPOS exposure. last week, the company indicated that the writedown was "sufficient".
Last month, Bank of Scotland appointed Paul McCann of Grant Thornton as receiver to Joseph O'Dea Limited and Ipos Retail 71 Limited. Both of these companies are 50 per cent owned by Uniphar.
Market sources have indicated that United Drug and Cathal May Roberts may be considering bidding for some of Uniphar's assets.