McInerney may be a target for short-sellers
Published 29/01/2010 | 05:00
THE Irish housebuilder McInerney, whose shares have collapsed to just 18c in the last year, may be attracting interest from short-sellers, many of them originating in the UK.
According to figures from the CREST electronic system, almost 7pc of the company's stock was out on loan in December, the most recently-available figures. This was far higher than any other listed Irish company. The level of stock out on loan can be used as a proxy for short- selling interest, according to CREST.
Short-selling works when hedge funds and other investors borrow stock and then sell it in the hope the price will fall. They can then buy back the shares and return them to their owners, pocketing the difference. Ireland has a ban in place on the short-selling of bank stocks, although the Irish Stock Exchange favours this being reviewed.
The amount of stock out on loan, according to CREST, the UK and Ireland settlement system, is far higher than any other Irish company. McInerney, as of yesterday, had a market value of just €36m, and is in negotiations with its bankers. On a year-to-date basis its shares are down 7.6pc.
McInerney said in recent days that talks with its bankers were taking longer than expected. The company has been in breach of covenants on its loan agreements with two syndicates of banks since late last year.
McInerney's net debts at the end of June came to €254m.
The company blamed the "diversity" of its banking facilities across Ireland and Britain for the delays. The company has been forced to cut its workforce from 700 to 300.