Bidders line up for Quinn Insurance
Published 22/07/2010 | 05:00
Several potential bidders for Quinn Insurance are studying the initial sales memo for the firm, including Aviva, FBD and Royal & Sun Alliance.
Meanwhile, a new debt package for the wider Quinn Group is now expected to be put in place by September.
A seven-page so-called teaser memo has been sent to interested parties with a view to screening out "tyre kickers'' -- companies who have no real intention of bidding for the company.
As a result the document does not disclose much additional information about Quinn beyond a trading update and a full account of recent changes in pricing strategy.
One of the executives who has received the document described it as being "very limited" and "short on detail".
"It is very short on information and tells you very little about the company," he said.
The companies sent the memo do not have to move to the next stage, but it is understood all three are considering the firm's potential.
A key problem is the amount of capital, demanded by the Financial Regulator, that will have to go into Quinn. There is also concern over the future claims risk that Quinn represents.
The firm was not profitable in 2008 and will not be in 2009 either.
Meanwhile, intensive discussions are taking place over the €1.3bn of debts owed by the Quinn Group to a group of banks and bondholders.
The Quinn Group now hopes to have an agreement with lenders wrapped up by September. Lenders are said to be approaching the talks positively and Quinn will not be forced to sell assets to generate cash.
The idea of swapping some portion of the debt for equity in the Quinn Group has not been discussed and is regarded as premature by those involved in the talks.
The emphasis is on putting a sustainable debt package in place for each of the Quinn Group's four key divisions.
The unknown factor in the talks is what Quinn Insurance will be sold for. While Sean Quinn and his family have stepped away from the running of the insurance company, they remain the equity holders.
Quinn Insurance also provides almost 50pc of the wider Quinn Group's revenues.
Despite this, the mainly Irish banks and the mainly US bondholders are not pressing for the break-up of the company.
Instead, the discussions have revolved around a five-year business plan for the company. If a business plan can be agreed by all sides, a full agreement is likely to be possible very shortly afterwards.
The sale of Quinn Insurance is being handled by Macquarie and, contrary to some media reports, only four or five bidders are expected to make it on to the final shortlist.
Anglo Irish Bank is also interested in taking over the insurance company, albeit with an insurance joint venture partner. The sale is being handled by Macquarie staff operating out of London.
The company has managed to improve its trading position in recent weeks following work done by the administrators Grant Thornton.
The UK business is now in the black on a week-by-week basis, with the Irish business not far behind. But a €10m charge for restructuring will make it difficult to produce a 2010 profit, sources told the Irish Independent.