Wednesday 25 April 2018

Over 30 firms eye Clerys hotel deal as owners seek operator

Planning permission has been granted for a hotel and offices on the Clerys store site
Planning permission has been granted for a hotel and offices on the Clerys store site

Ronald Quinlan Commercial Property Editor

Upwards of 30 Irish and international hoteliers have expressed an interest in operating the boutique hotel proposed as part of the redevelopment plan for the iconic Clerys premises on O'Connell Street, the Irish Independent has learned.

It is understood that property agents have been engaged by new owners Natrium to select an operator for the venue, which will be located to the rear of the former department store on Earl Place.

The news of Natrium's search for a hotel operator should help to counter growing speculation within the property industry suggesting that Clerys is being readied once again for sale.

While a spokesman for Natrium declined to comment on that speculation when contacted by the Irish Independent, a source familiar with the matter insisted that the company's plans to redevelop the former department store remained "on track".

Asked if the sale of Clerys was being ruled out altogether, the source said: "Is it being prepared for sale? No. Would Natrium turn down an offer in six months' time if somebody came along with a big sum of money? I can't say that. Clerys is a very attractive property to a lot of people in Dublin and beyond. But it isn't being put up for sale."

The Clerys saga has been running since 2015 when Natrium - a joint venture comprising Deirdre Foley's D2 Private and Cheyne Capital Management - acquired the former department store from Gordon Brothers for €29m. Having secured ownership of the business in a deal signed off between the parties at 2:30am on June 12, 2015, Natrium closed its flagship O'Connell Street premises without notice, with the loss of 460 jobs.

The move met with a wave of public anger, later reflected in numerous objections to Natrium's plans for the redevelopment of the former department store building. Dublin City Council granted planning permission in December 2016 for a mixed-use scheme comprising offices, retail units, leisure facilities and a boutique hotel on the site.

Separately, the High Court yesterday, was told two former directors of the company which operated Clerys store were "actively misled" into believing the business would continue as a going concern after its sale.

Yesterday, Mr Justice Robert Haughton directed the joint liquidators of OCS Operations to discover documents concerning seven meetings held by one of the liquidators, Eamonn Richardson of accountancy firm KPMG, with the new owner or their representatives in a period of six weeks before the Clerys sale and winding up.

Clerys was sold to Natrium, a vehicle of Dublin-based investment firm, D2 Private, and KPMG acted as financial adviser to D2 Private when Natrium purchased the OCS companies which owned and operated Clerys, the court was told.

Judge Haughton agreed with Michael Cush SC, for the two directors, that the documents sought were necessary and relevant to their defence to the liquidators' application for disqualification orders against them over their conduct of the affairs of OCS Operations, which operated Clerys for some years before its sale.

The disqualification application, under the Companies Act, will be heard on a later date.

The pair - Rafael Klotz and Macolm MacLennan MacAulay - are professional directors. Mr Cush had said any disqualification or restriction order made against them here would have significant consequences for them.

Both deny unfitness or that they acted in breach of their duties as directors and say they acted honestly and responsibly in the conduct of the company's affairs.

Mr MacLennan MacAulay, with an address in Cheshire, England, is chief operating officer Europe of US-based Gordon Brothers, owner of the OCS group. He was a non-executive director of OCS Operations from August 2012. Mr Klotz, with an address in Connecticut, US, was a non-executive director for six months before the sale.

The judge noted their core defence to disqualification is the true cause of the company's insolvency was not their actions but a "pre-planned strategy" on the part of its new owners, of which the directors claim they had no prior knowledge, to have it wound up. They claim they got assurances from the purchaser that the company would continue as a going concern.

Irish Independent

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