Developers' proposals rejected in interest payment clash
Published 02/12/2010 | 05:00
NAMA has sent a significant number of business plans back to developers again as differences continue over the issue of 'rolling up' or postponing interest payments on loans.
As reported in the Irish Independent last week, north Co Dublin developer Gerry Gannon has sent a business plan that involves rolling up interest for five years for some of his companies.
But it is understood that NAMA is refusing to accept "standstill" business plans from any developers where the overall amount owed is not reduced.
It is understood interest payments can only be deferred or added on to the overall loan, if the developer has agreed a widespread asset sell-off programme.
"It is about reducing the overall level of indebtedness and signing up to milestones on disposing of assets," said a source.
The chief executive of NAMA, Brendan McDonagh, has said that NAMA will never be as generous with interest payments as the banks were over the last two years.
"Effectively, we don't have time to be waiting for people to hope that tomorrow is going to be sunny again," Mr McDonagh said in April.
NAMA is already sitting on €9bn of loans that have interest roll-up arrangements and won't want to expand this much more.
One of Mr Gannon's companies, Gatland Property, recently reported its results and acknowledged preparing its accounts on the basis of support from NAMA.
"A business plan has been submitted to NAMA which provides that interest would be rolled up on the loan for a period of five years,'' the company accounts stated.
"NAMA has not yet communicated its views on the business plan to the company.
"On the basis of the above, the directors consider it appropriate to prepare the accounts on a going concern basis,'' it said.
Mr Gannon's company took a €16m impairment in the year to the end of 2008 and made a loss of €17.1m, according to its profit and loss account.
There is a deficit in shareholders' funds of the same amount.
Gatland Property holds lands near Dublin Airport and, while this usually increases their value, the accounts state that such lands have "a limited catchment population''.