independent

Monday 21 April 2014

Mellon may go bankrupt in UK if he can't cut a deal with Nama

Niall Mellon meets a young resident of  Wallacedene township, South Africa. Picture: Niall Carson/PA
Niall Mellon meets a young resident of Wallacedene township, South Africa. Picture: Niall Carson/PA

PHILANTHROPIST and developer Niall Mellon has said he may be forced to declare bankruptcy in the UK if he cannot reach a "fair settlement" with Nama.

In a wide-ranging interview with the Sunday Independent, the charity boss opened up for the first time about his determined battle to rebuild his business empire from the ashes of the banking meltdown.

Mr Mellon was once worth millions through his property empire in the UK and Ireland, but was left "penniless" in the wake of the 2008 economic collapse.

"It has taken me six years. I have now dealt with the vast majority of my creditors and I've really proud about that," he said.

"It has taken blood sweat and tears, but I'm in a good position now. I'm left with a whale of a deficit as a consequence of the banks going bust – from Anglo and Irish Nationwide primarily."

Despite this, the developer has ambitious plans to completely free himself from his guaranteed debts and Nama by September this year – exactly six years on from the banking collapse.

He said he is currently searching for a firm in the UK to buy out the reminder of his assets and – crucially – his debt guarantees.

Mr Mellon said: "At the moment I'm negotiating with Nama. I'm going to try and see this year can I put together a private equity overseas company to make an offer for my assets. If that happens, what is normal practice is if they buy all your loans, then they buy your guarantees.

"I'm going to try and negotiate some deal where I get finished with my guarantees. So I'm making my target the anniversary date of the bank collapse. From that date, six years of my life have been destroyed and I've given enough at that point."

But while he is positive about the future, Mr Mellon admits he is now entering a "very important" eight-month period.

Referring to his ongoing negotiations with Nama, he said: "I'm going to do everything I can to reach a fair settlement with Nama. I know if I don't, it won't be a fault of Nama, it will be a fault of their political masters.

"Either way I'm going to have to consider, with no end in sight to this situation, having to take the bankruptcy option in the UK."

Mr Mellon also hit out at Section 172 of the Nama legislation, which he called the "most spiteful piece of legislation to be introduced in Ireland in the past 50 years".

The section prohibits indebted developers from buying back their assets if the loans have been transferred to Nama. Mr Mellon said it had impacted the prices that can be obtained for distressed properties.

A major issue for developers operating after their debts have been taken on by Nama, is that it retains an interest in their future financial affairs.

The individual deals that Nama agreed with developers are governed by absolute secrecy and Mr Mellon did not wish to comment on the proportion of his earnings that the State's 'bad bank' claims.

However, he did speak about the realities of working within the Nama framework and revealed he does not receive any salary or fees from the agency.

Mr Mellon added: "Nama were very surprised when I wrote to them about two years ago and updated them on my involvements, both in this coal project and my construction activity. I wrote about my future earning income potential from these projects and we're still having an ongoing discussion, to reach some equitable share of what I make for the next couple of years."

Famed for the Niall Mellon Township Trust, which builds homes for South Africa's poor, Mr Mellon estimates that he owed around €150m following the crash.

He travelled to London to meet investors, but fund managers, while impressed with his CV, were concerned over his financial position.

But persistence eventually paid off and after numerous meetings with high-net-worth individuals, Mr Mellon managed to secure up to €30m for a number of projects in Africa.

One of the first projects was MMS Developments, a mixed housing, roads and services development on the Eastern Cape area of South Africa.

Mr Mellon said MMS has helped to create around 600 jobs in one of the most undeveloped regions in the country.

He also became involved in Elitheni Coal, a mining company in the town of Indwe in the Eastern Cape.

Mr Mellon, who joked that he was previously a "bad farmer in Kilkenny", also revealed how he had to reconsider a proposed farming project in the French Congo.

He and a group of investors had secured a farm in the country, but in the end he decided against pursing the venture.

"I put together again a consortium of investors in 2011 and we secured a large farm of 40,000 acres. The Congo were very keen to get top entrepreneurs into the country and they were willing to give us a free farm," he said.

The decision not to pursue the project was made "in part because of the uncertainly hanging over me with the final end position with Nama".

He added: "I still had this issue unresolved with Nama and I just didn't feel like taking it on and going the extra mile until I could get real certainty of when I'm going to be out, finished and properly moving on with my life. So I didn't continue with it."

While the project didn't proceed, it indirectly led to his involvement in the aid effort following an arms depot bomb explosion in Brazzaville that killed around 200 people. A contact on the farm project asked for help and Mr Mellon explained how he managed to raise €1m for essential medical aid.

It is the first time that Mr Mellon has spoken of his involvement in the effort, though he afforded most of the praise to his team.

On the topic of his charity work, Mr Mellon said he reached his dream of providing 100,000 houses in South Africa in 2012, despite his own perilous financial situation.

The philanthropist said he wanted to provide an example to his children that they should always help the less fortunate.

He was also keen to stress that his work was not based in any religious conviction or creed, but in a feeling that the strong should help the weak.

Among Mr Mellon's current goals is to provide educational facilities for up to 200,000 of the poorest children in Africa.

He has already built one school in Nairobi, Kenya, while a second is 80 per cent complete.

Mr Mellon also had words of advice for anyone who finds themselves in a crisis.

"What's very important in a crisis is to write down your objectives and I would encourage people who are still confused lost and feeling hopeless with their own scenario to write down what are truly your most important objectives in your life," he said.

Sunday Independent

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