Richard Curran: Liquidation of Treasury's assets a real test for Nama
Two fairly low-key Georgian office buildings on St Stephen's Green went on the market last week. It was the second time that receivers to the Treasury Holdings group have tried to sell them. In need of refurbishment, the guide price is €1.5m. Treasury bought them in 2007 for €9.5m.
These are just the latest, albeit modest assets, in a massive receivership and liquidation of the once enormous Treasury Holdings operation. Owned by Johnny Ronan and Richard Barrett, it accumulated global debts of around €2.7bn, with about €1.7bn of that ending up in Nama.
The big question is how much will the receiver be able to secure for the dismantled empire, which is now being sold off piece by piece? Bigger deals are well advanced like the sale of Central Park, a five-block office development in Leopardstown in Dublin. A shortlist of five bidders has been drawn up and bids are believed to be between €247m and €262m.
Nama had already lent the Treasury Group an additional €100m before it finally shut it down. This figure will have to be added to the final prices achieved before Nama makes a profit.
The Treasury receivers are not the only ones selling assets. So too is Ronan himself.
Barrett and Ronan reached a settlement with Nama last summer when they received over €100m from the sale of their shares in TCT, a Chinese property venture spun out of Treasury.
This was probably the end of Richard Barrett's dalliance with Nama, given that there is no sign of any personal guarantees by him on any Treasury Holdings debt.
But for Ronan, matters were a little more complicated. He has extensive borrowings in the Nama stable, both personally and through other property vehicles. Some of it is through a personal and family group of companies called Lanaree Ltd.
Recent accounts for Lanaree show that last summer Ronan paid €21.3m of the proceeds of the China share sale towards paying down group debts. He also used the €13.1m proceeds from the sale of an office building on Burlington Road to pay down more debt.
Lanaree also planned to sell an investment fund worth €1.3m and other disposals seem likely. The directors of Lanaree say the company lost over €5m in 2012 and had guaranteed a total of €54m of debts racked up by subsidiaries and other connected companies.
On top of that Lanaree had lent €33m to other group companies, which it said it will not be in a position to pay back.
Lanaree is dependent on its banks and Nama. The accounts show that by the end of 2012 it had breached a loan covenant with Nama. Around €14m of its borrowings are due this year, creating another financial crunch.
But while Ronan and Barrett fought very hard through the courts against Nama moving on them, Ronan now seems optimistic of getting future support from the state agency.
The directors say that following negotiations with Nama they "believe on the basis of discussions to date that they will sign up a Letter of Support with Nama in the coming months".
Ronan is personally exposed to the fortunes of Lanaree, a company he co-owns with his family. He has given a personal guarantee on €5m on its debt borrowed from Bank of Ireland Private Banking. Plus IBRC held guarantees from Lanaree and Ronan regarding around €19m of debt racked up by another company, Ardquade Ltd.
However, as with many things about Johnny Ronan, who was a director of 323 companies, this is not the whole story. Ronan's personal property portfolio stretches beyond the assets in the Lanaree group of companies.
He may own as many as 25 different commercial properties believed to be worth over €200m, including the NTMA and Nama building in Dublin.
There is a hint of this separate portfolio in the Lanaree accounts which say the company entered a joint venture agreement with John Ronan in 2009. Lanaree would pay "financial contributions in respect of certain properties owned by John Ronan until 31 December 2015". Lanaree would be entitled to 15 per cent of the net proceeds in relation to the personal properties.
As a personal portfolio it is very difficult to determine the scale and financial position of that business, because it doesn't seem to be held through limited companies.
After an acrimonious battle in the High Court, Ronan appears to be satisfying Nama's requirements to pay down debt. The estimated €42m Ronan received from the sale of his shares in TCT in China, have been crucial to the fortunes of the Lanaree group of companies which have benefited from it to the tune of €21.4m.
On the bigger picture, Nama will tot up the proceeds of every receiver sale of a Treasury asset to see where it stands with the former Treasury Holdings. At the time of the court case in 2012, it was speculated that around €1bn of Treasury debt had been bought by Nama for around €600m.
Treasury delivered two interested bidders for the debt, Macquarie Bank and Hines group. According to affidavits from Nama executives, Macquarie offered €570m to Nama, consisting of €67m in cash and a loan from Nama itself for €503m. Nama turned it down.
With Central Park alone set to go for nearly half that amount and €100m flowing into Nama from the sale of the TCT shares, the agency looks to have made the right call.