Nesbitt's fate at Arnotts in the balance
Northern Quarter 'dead in water' as properties to be sold
Published 07/08/2010 | 05:00
The fate of Arnotts chairman Richard Nesbitt is expected to be decided next week when the banks taking over the department store are likely to announce a series of management and board changes.
The future of Mr Nesbitt rests with Mark Schwartz, the American founder of advisory group Palladin, which has been advising the company for several months. It is understood several phone calls between Mr Schwartz and Mr Nesbitt have taken place this week.
It has also emerged that Anglo studied the idea of putting Arnotts into receivership before finally coming around to the idea of taking control of the firm.
"We looked at alternatives -- receivership, liquidation, selling it off in pieces, and we decided that this was the best thing to do," said Anglo chief executive Mike Aynsley yesterday.
"If you look at what happened, they were buying all these properties and developing them at the top of the market, and they were leveraged up with debt," he commented.
"It's a really good example of a good business straying from its meat and potatoes and getting caught. It doesn't take away from the viable business model underpinning Arnotts," he added.
Mr Nesbitt, who has served on the Arnotts board for about 30 years, is said to be interested in a role as chairman, but sources familiar with the banks' thinking said it may be difficult for him to retain a role, as Mr Nesbitt may have to concentrate on his own financial affairs.
Mr Nesbitt could not be contacted through his spokesman last night and is believed to be out of the country.
The upcoming talks with unions is said to be one area in which Mr Nesbitt believes he can still make a contribution.
Anglo and Ulster Bank are expected to name directors to the board next week, with both banks already sounding out potential representatives this week. They are expected to be from a retail background, rather than a banking background.
Ulster and Anglo will design a structure that means they do not have to consolidate the accounts of Arnotts into their own books.
The banks are also expected to sell off a large amount of the Arnotts property portfolio, with some other parts being hoarded on a more long-term basis until the market recovers.
The Northern Quarter, as originally envisaged by Mr Nesbitt, is said to be "dead in the water", with the banks anxious that Arnotts concentrates solely on its retailing activities.
Paladin is the key force at the company and is believed to have significantly improved on its performance since taking the reins. The EU has set a deadline of Monday for submissions from parties who object to the two banks taking over the store.