Monday 27 January 2020

Personal loans seen as key in O'Flynn examinership case

Developer Michael O'Flynn
Developer Michael O'Flynn

Peter Flanagan, Commercial Property Editor

BLACKSTONE's bid to take over O'Flynn Construction Group is likely to focus on personal loans held by Michael O'Flynn worth less than €20m.

The US private equity firm last week moved to appoint an examiner to four of Mr O'Flynn's companies in a move which will smooth the way to takeover the O'Flynn construction empire if it is successful.

Whlie Blackstone owns loans to Mr O'Flynn nd his businesses with a par value of €1.8bn, it is thought that personal loans worth a fraction of that are the key to allowing the firm access to the wider O'Flynn Group.

Mr O'Flynn claims payments on his various business and personal loans are up to date. Crucially though, his personal loans are repayable on demand. This means that Blackstone can demand they be repaid with little notice.

Blackstone subsidiary Carbon Financial, which is seeking to appoint an examiner to the O'Flynn companies, implies the structure of the personal loans is vital to the move.

The agreements relating to the corporate facilities provide that the appointment of a receiver over any asset securing the personal facilities will lead to an event of default under the corporate facilities and make the full €1.8bn borrowings repayable immediately. With the full total of loans becoming repayable, then Blackstone will be able to take control of the business, and the numerous assets it holds.

Blackstone itself has admitted the assets can still be profitable and plans to invest around €16m to develop and improve the O'Flynn properties if it can get control of them.

However Mr O'Flynn has already made clear he will fight hard to retain control of the business. On Thursday, the Cork man was granted permission to fight the appointment of an examiner. The developer and his finance director Brendan Lenihan claim the application by a Blackstone company for an interim examiner to be appointed to four key companies in the group was an improper attempt to take over the business.

Now, both sides will battle it out on Tuesday after Judge Peter Kelly agreed the case was urgent enough to go to a full hearing,

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