Anglo Irish edges closer to taking control of Arnotts
Financial Regulator Matthew Elderfield looks set to give the green light to Anglo Irish Bank to take control of Arnotts, the iconic Dublin department store.
Anglo is regulated by Mr Elderfield and no deal could go ahead if the Regulator opposed it.
However, sources have indicated that he believes the nationalised bank is trying to manage risk by taking a stake in the heavily indebted department store.
"While we cannot comment in relation to individual firms, banks have a variety of tools to manage distressed debt, including taking equity stakes -- this is a well-established practice and a wide range of Irish banks are currently employing this tool,'' said a spokesperson for the Regulator.
Meanwhile, the union for Arnotts' 1,000 workers is demanding representatives on the new board to avert a major jobs cull.
Mandate asked for the worker nominees when it met managers and the banks' (Anglo and Ulster Bank) representatives, the Paladin Capital Group, yesterday to assess the risk posed to its members when it passes into bank ownership.
It was the first meeting between the union and the retailer since it was revealed that it will soon be effectively owned by Anglo and Ulster Bank.
Arnotts owes the banks around €300m after it invested in the Northern Quarter shopping project, which has since been postponed.
The banks have applied to the European Commission to take control of the company by converting its debts into shares, with a deadline of next Monday for objections to the move.
Mandate wrote to Arnotts urgently seeking the meeting and demanded that workers were included in talks on business restructuring plans.
Arnotts has assured staff members that their jobs are safe but there are widespread fears about future job losses when it is under bank control.
There are growing fears that the banks may offload the landmark store if the EU rubber-stamps a deal giving them effective ownership.
Arnotts employs more than 900 workers at its landmark store on Henry Street in Dublin and almost 100 between its subsidiary, Boyers, on Talbot Street, and an outlet in Stillorgan.
Following the meeting, Mandate general secretary John Douglas said the company agreed to talks with the union and the Paladin Group agreed to pass on its request for worker nominees on the board.
He said he demanded that workers must be involved in making decisions about the retailer's future, including at board director level.
"On this basis, Mandate is prepared to engage constructively with the company in the process of revitalising Arnotts as a leader in the retail industry."
Mr Douglas said Arnotts' difficulties were a direct result of management's decision to enter the property industry.
"In this context, any plans to stabilise the business have to take account of the fact that staff have been a vital component in the success of the retail business and are in no way at fault for the situation Arnotts now finds itself in," he said.
"Indeed, we have said to management very clearly that if the company wishes to develop and implement long-term viability plans, it can only do so successfully with the active support of its key stakeholders, their staff and their trade unions."
An Arnotts spokesperson said the meeting was a result of the union's request for talks and as a result of media coverage of its financial difficulties.
In a previous statement, it said jobs were secure and it would continue to invest in the future of the store.
Staff at Arnotts did not suffer pay cuts during the recession, but their wages were frozen and contracts altered because of new opening hours.