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Tuesday 23 September 2014

Michael O'Flynn tried to buy loans from Blackstone

Published 15/08/2014 | 02:30

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Michael O’Flynn: Builder is now fighting for survival
Michael O’Flynn: Builder is now fighting for survival

DEVELOPER Michael O'Flynn offered to buy back his personal loans from the US investment giant Blackstone last month, but his offer was rejected.

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Mr O'Flynn succeeded at the High Court on Wednesday in removing an interim examiner from a number of companies tied to his O'Flynn Construction empire and was reinstated as head of the group.

Blackstone, through its subsidiary Carbon Finance, moved to take over the O'Flynn business on July 29. It is understood however that in the days before that, Blackstone and Mr O'Flynn had been in talks about him taking back his personal loans for close to a 50pc discount.

It is believed Carbon were ready to sell the loans, which had a par value of €23m, back to him for around €12m. Mr O'Flynn offered €8m, but that was rejected by Carbon.

Mr O'Flynn declined to comment on the negotiations.

The details of the talks bring a new twist to the saga as Mr O'Flynn's personal debts were key to the US firm's move against him.

Carbon bought loans worth €1.8bn that were tied to Mr O'Flynn and his companies from NAMA in May. At the time it had been expected they would work with Mr O'Flynn but that relationship soon turned sour.

In July, the US firm demanded Mr O'Flynn repay €16m in personal loans immediately and the same day moved to have an examiner appointed to the business. Carbon also removed the O'Flynn directors from companies tied to the O'Flynn Construction Group.

Both those moves were overturned by Judge Mary Irvine in the High Court on Wednesday. In a strongly worded decision, Judge Irvine said Carbon had not acted in the "utmost good faith" and had not fully disclosed all relevant information to the court when it applied for the examiner to be appointed.

The emergence of the loan negotiations comes as calls grow for a review of how NAMA has been conducting its asset sales. The state bad bank is mandated to get the best price for assets when it is selling them, but Fianna Fail's finance spokesman Michael McGrath wants this policy changed to consider the social consequences of selling loans or property to investment firms with no long-term interest here.

"We should be under no illusions as to the nature of many of the purchasers of NAMA loans. [They] will typically take a short term outlook on their investments. While they may be in a position to make handsome returns by flipping assets they acquire this may not be consistent with the long term economic interests of the state," Mr McGrath said.

"The highest bid in the short term for a portfolio of loans may not always be in the best long term interests of the citizens of the State. NAMA should be cognisant of the plans for a site that a potential investor may have," he added.

Irish Independent

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