Restructure deal to leave Quinn Group with just €400m debt
New proposals on the table after renewed talks in London
Published 08/10/2011 | 05:00
QUINN Group could be left owing as little €400m under debt restructuring plans being discussed in London. It's down from an original plan that left the main Quinn businesses owing €750m.
Anglo Irish Bank took majority control of the Quinn businesses earlier this year as a result of €2.9bn it is owed by businessman Sean Quinn and his family.
Lenders to the Quinn Group emerged owning the rest of the company, after Anglo made its move.
It means the Quinn family will not benefit from any "debt forgiveness" at Quinn Group. Indeed, even the debts that Quinn Group will no longer have to service after a deal is done will still be owed to lenders, but they will be reassigned and only owed by parts of the group earmarked to be sold off.
The new owners are in reality arguing about how much their own company should owe to themselves when a new balance sheet is put in place.
All sides agree that debt is currently too high, but a deal agreed last April had to be scrapped after mangers at Quinn revealed that turnover this year was far less than expected.
Under the old plan, Quinn Group's total debt of €1.27bn was to be spilt in two -- €750m would be owed by the main Quinn Group and remaining loans shifted to the non-core units earmarked for sale.
The new proposals go further. Instead of the core Quinn Group owing €750m it will owe between €400m and €500m. One bondholder is even looking for a cut so big it would leave the business owing less than €400m.
The detailed talks are around how much debt the core parts of Quinn Group -- the plastics, bottling and quarrying units -- can support.
Specialist newswire Capital Structure said the plans under discussion were aimed at cutting the annual interest bill for Quinn Group to €40m.
Renewed talks on slashing Quinn Group's debt have been going on for weeks. Anglo Irish Bank is understood to be on the margin of the main discussions, waiting for an agreed deal from the others lenders before moving ahead with the scheme.
The other lenders are split on how much debt should be slashed to make the business viable and ensure that they make money back over time. These other lenders are a mix of banks and hedge funds.
Broadly speaking, the banks would prefer a higher level of debt to remain in place when the company is restructured, but hedge funds are pushing for a larger debt write-off in order to boost the long-term value of the business.
The banks are understood to include Barclays and KBC. The hedge funds include "distressed debt investors" Goldentree, Marathon, Silver Point and Strategic Value Partners, mostly based in the US.
Talks took place in London throughout the past week. Sources involved say a deal needs to be done by Thursday if it's to be in finalised and in place for an October 30 deadline. All sides remain confident that deadline is likely to be met.