Wednesday 24 May 2017

Quinn Insurance sale passes the first hurdle

Laura Noonan and Fergus Black

THE sale of Quinn Insurance to Anglo Irish Bank and Liberty Mutual passed its first hurdle yesterday but court hearings on the deal will continue for the rest of this week and the transfer of the business is not expected until the end of the month.

The news comes as efforts to strike a revised deal with Quinn Group's bondholders go down to the wire in London, as Anglo pushes to secure agreement by next Thursday so the overall Quinn deal will complete at the end of the month.

The multi-faceted deal will see Anglo and US insurer Liberty Mutual take over the bulk of Quinn Insurance's business, while administrators will take responsibility for a residual book of claims with support from the Insurance Compensation Fund (ICF).

Anglo will own 75pc of the Quinn Group, while the remainder will be owned by bondholders who will also hold significant debt in the new group entities including some debt that was formerly guaranteed by Quinn Insurance.

The complexity of the deal makes it highly desirable for all elements to be legally enacted together.

Yesterday, the High Court began hearing the administrators case for selling the insurer to Anglo and Liberty. Mr Justice Nicholas Kearns agreed that some €738m of ICF cash could be drawn upon by the administrators, including a €320m call this year, if the proposed sale goes ahead.

The call on the fund was supported by counsel for Finance Minister Michael Noonan but objected by two lobby groups -- Concerned Irish Citizens and Concerned Irish Businesses.

The ICF will ultimately be replenished with a levy on insurance policies that will raise about €65m a year from 2012.

Today, the court will meet again to consider the request to take core businesses out of Quinn Insurance and put them into the new Liberty/Quinn entity, while leaving the remainder behind.

The measure may meet technical objections since the new Liberty/Quinn entity has not yet got a solvency certificate from the Central Bank.

Bridging capital of around "tens of millions" of euro is expected to be put into the entity towards the middle of the month, the Irish Independent understands, while the new insurer's management (all drawn from the Liberty "family") may also be announced at that point. The insurer's sale is not expected to be approved until Friday.

Meanwhile, efforts to convince Quinn Group bondholders to agree to a "revised" debt deal are continuing in London. Anglo sees the revision, which could move about €100m of debt from the core Quinn Group, as necessary given the "challenging" environment the group is facing.

But three groups of bondholders -- distressed debt investors Silver Point and SVP, and clients of Deutsche Bank -- are putting up significant resistance as they don't want to see the €100m of debt transferred to a non-core Quinn company where they have a poorer chance of repayment.

Sources described the discussion as "protracted" but said it was likely that a deal would be reached. Next "Wednesday or Thursday" is seen as the crunch day, since Anglo would need 15 days to explore legal options to resolve the wrangle.

A meeting between Anglo and the bondholders may take place on Monday, the Irish Independent understands.

Irish Independent

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