Sunday 26 March 2017

Quinn and Anglo draw up 'Plan B' ahead of bondholders' vote on deal

FINANCE

Laura Noonan

Laura Noonan

QUINN Group management and Anglo Irish Bank have drawn up a 'Plan B' in case a breakthrough deal with bondholders fails to survive a crucial vote on Monday.

The bondholder deal was hammered out a fortnight ago, but sources last night said the vote was likely to go "down to the wire" when lenders gather to formally approve the agreement.

Some have already submitted their votes by 'proxy' but those votes are being closely guarded by the bondholders' advisers and the company has limited visibility over them.

Many lenders, including banks and hedge funds, are expected to turn up at Monday afternoon's meeting to vote in person.

If lenders with more than 75pc of the debt vote in favour of the 'creditors voluntary arrangement', it will be passed and ownership of the Quinn Group will transfer to Anglo (75pc) and bondholders (25pc).

If it's not, Anglo and the Quinn Group will have a race against time to implement a 'Plan B' that will allow for the sale of Quinn Insurance to go through at the end of next week.

The Quinn Insurance deal is linked to the group debt negotiations because Quinn Group bondholders are being asked to release guarantees they have over Quinn Insurance assets.

Sources last night said it was of "crucial" importance that a deal was done to protect the sale of Quinn Insurance to Anglo and US insurer Liberty Mutual.

Quinn Group management and Anglo have devised a 'Plan B' that will allow this to happen, but sources last night declined to reveal details.

The deal struck a fortnight ago would see bondholders shift about €300m of their debt from the 'core' Quinn Group to a non-core entity, where their chances of repayment are slimmer.

The change was made because of "challenging" trading conditions that meant the Quinn Group could not bear as much debt as had initially been hoped when the original deal was drawn up in April.

In return for the bondholder concession, Anglo agreed to lift most of the vetoes it had originally agreed to block the sale of Quinn Group assets.

While Anglo has argued that the deal on the table is in the "economic interest" of all bondholders, some lenders have protested at the new terms. The full extent of their protest will become clear at Monday's vote.

Irish Independent

Promoted articles

Also in Business