Lenders want higher interest on Quinn Group's €1.3bn debt
Family claims it is firmly committed to repaying €2.8bn in personal liability and isn't seeking any writedowns
Published 05/10/2010 | 05:00
Lenders to the Quinn Group are demanding higher interest rates on the company's €1.3bn debt pile and also want to re-allocate the debt across different Quinn Group companies as part of a settlement deal.
The difficulty is the Quinn Group is now only producing earnings (EBITDA) of about €130m a year, meaning that the process of reducing the debt will have to take place over a long time horizon.
Meanwhile, the Quinn family maintained yesterday it could repay €2.8bn in personal debts and was not seeking to write down any of this money. It described this as a "firm commitment'' to the Irish taxpayer.
The Irish Independent understands that hedge funds that have bought into the debt of the Quinn Group remain only a small group, holding less than 5pc of the total debt, but their influence could yet grow.
The company has put a proposal to the lenders and initial indications are positive that it may gain acceptance, people familiar with the situation have said. There is no talk at this stage of lenders seeking equity in the company, but that is always a possible outcome, said the sources.
The negotiations will now revolve around the increased margin on the debt which is priced off Euribor (euro interbank offered rate).
The lenders also want to re-allocate the debts with the manufacturing businesses of the Quinn Group taking on more of the debt than other parts of the business.
It was reported at the weekend that Anglo Irish Bank has now taken a provision for €2.3bn on the Quinn family account. The family owe the bank €2.8bn in total and this is secured on shares in Quinn Group (ROI) and also personal assets, mainly property, owned by the family.
The family yesterday claimed one of the chief ways this money could be repaid was if Quinn Insurance was sold to Anglo.
"A significant element of the repayment of debt will result from a realisation of substantial returns from Quinn Insurance Limited. These will be generated under the proposal being considered by Anglo Irish Bank which is using reputable and internationally acknowledged financial advisers to independently assess this proposal.''
The Quinns said yesterday in a statement that the Quinn Group would also be part of the plan to pay down debts.
"All of the Quinn operations continue to trade profitably and are well placed to benefit in the future from the significant investments made over more than three decades, thereby ensuring the protection of the very significant employment built up by the Quinn Group,'' said the statement.