Saturday 20 December 2014

Developer 'shocked' as US giant Blackstone moves to get control of €1bn assets

Peter Flanagan and Tim Healy

Published 30/07/2014 | 02:30

Michael O'Flynn at The Elysian gardens, Cork city. Provision
Michael O'Flynn at The Elysian gardens, Cork city. Provision

ONE of the country's biggest property developers has been left in "complete surprise and shock" after US investment giant Blackstone moved to seize control of his O'Flynn Construction Group.

Cork-based developer Michael O'Flynn was conferring with his legal team last night after Blackstone moved to take control of assets tied to him worth more than €1bn.

Blackstone paid NAMA €1.1bn in April to buy business and personal loans tied to Mr O'Flynn that had a face value of €1.8bn. At the time of the sale by NAMA it had been expected that the US investment giant would work with Mr O'Flynn to develop his business.

Blackstone is the biggest property firm in the world. It is best known in Ireland for buying the Burlington Hotel in Dublin in 2012 and snapping up the biggest stake in Eircom.

Talks between the two sides are thought to have been ongoing for some time but yesterday the firm moved to have an interim examiner appointed to O'Flynn Construction Group.

In a statement, Mr O'Flynn said he was "completely surprised and shocked" by the move. "The O'Flynn Group loans and some separate personal loans are fully serviced and all payments are up to date," he said.

"Since NAMA completed on their loan sale, I have been in discussion with representatives of Blackstone with a view to agreeing a framework to take the business forward.

"This development represents a very unexpected and aggressive move on the part of Blackstone Group."

The O'Flynn loans include borrowings secured against a host of assets across Ireland, the UK and Germany, including the 17-storey Elysian Tower in Cork city, the highest residential building in the Republic.

Mr O'Flynn's comments came after Blackstone subsidiary Carbon Finance secured the appointment of an interim examiner to four key companies in the group.

At the High Court yesterday, demands were also served to Michael and John O'Flynn, as principal shareholders of the parent company, for immediate repayment of what the High Court was told were their "substantial" personal debts to NAMA.

Enforce

If repayment was not made, it was intended to enforce security over assets of the shareholders, including their shares in the parent company, resulting in an event of default on the corporate facilities, the court was told.

In the absence of payment, it was intended to appoint Grant Thornton as receivers over certain assets of certain other group companies in Ireland, the UK, British Virgin Islands and the Isle of Man.

It was not intended to appoint receivers over assets of the four companies because it was believed those could survive as a going concern.

The four companies are: O'Flynn Construction Company, employing 16 people; O'Flynn Construction BTC; O'Flynn Construction (Rochestown) and Eastgate Developments (Cork).

The directors and principal shareholders of the companies have not been "co-operative" with Blackstone and that, combined with lack of information about accounts of the group, led to the bringing of the petition, it was alleged.

The petition was brought by Carbon, as creditor of the companies, and moved by its counsel Paul Sreenan yesterday before Mr Justice Brian McGovern. Mr Justice McGovern granted court protection to the four companies and appointed Michael McAteer of Grant Thornton as interim examiner.

Court protection will continue until the hearing of the petition on August 27.

Irish Independent

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