Move to restructure Quinn loans as fears grow on €700m debt
Published 10/09/2011 | 05:00
FRESH efforts are under way to restructure the Quinn Group's loans after "challenging" trading triggered fears that the conglomerate couldn't support its €700m debt pile.
Sources last night confirmed that bondholders have already been asked to release the Quinn Group from some of its debt obligations agreed back in April.
It is understood that as much as €100m of bonds could be moved from the mainstream Quinn Group to a non-core unit, which has a materially worse credit profile than the main group.
Majority-owner Anglo Irish Bank has ruled out putting cash in to ease the Quinn Group's difficulties, but may have to cede some control to bondholders to convince them to sign up to the new deal.
This could include giving up a veto on any asset sales for the next five years, though sources said it was too early to be specific about any potential concessions.
Initial meetings with a group of more than 120 bondholders took place in London on Wednesday -- the price of Quinn Group debt fell significantly afterwards.
Sources last night confirmed further meetings would take place on Tuesday between the group and bondholders, including US hedge fund Silver Point Capital which has taken a significant position in Quinn Group debt in recent months.
"This is the beginning of a process, but we're hopeful that we can get agreement," one source said, adding that all parties would lose out if the April deal fell apart.
Quinn Group chief Paul O'Brien last night insisted the situation does not give rise "to major issues between the parties" and that the group's rescue was still on track.
If the Quinn Group deal breaks down, the sale of Quinn Insurance to Anglo and Liberty Mutual would have to be significantly modified and could collapse.
At meetings this week, Mr O'Brien is understood to have told lenders that 2011's earnings will come in at between €80m and €85m, and not the €100m previously expected.
Mr O'Brien also presented a five-year business plan that was less optimistic than some bondholders had expected, despite recent public comments from Anglo about the Quinn Group's "challenging" trading.
Mr O'Brien said the group was "settling on our banking covenants" ahead of full implementation of the restructuring agreement in April.
"This would be a normal course of events and I would not regard this as giving rise to major issues between the parties," he added. "We are on track to implement the restructuring next month."
The new agreement would see bondholders transfer some of the €700m of bonds that are currently with Quinn Group to a non-core entity that already holds €588m of debt.
The exact amounts of debt to go across have not yet been finalised, but the Irish Independent understands the figure could be as high as €100m.
Under the April deal, Anglo retained an absolute veto over a number of decisions at the Quinn Group, including the sale of assets and redundancies.
It is understood that some elements of this veto may have to be "relaxed" to convince the bondholders to come on board with the new structure.