Tuesday 22 October 2019

Anglo snubbed foreign suitors for troubled Arnotts

Three approaches made for debt-laden retailer

Shane Ross

Anglo Irish Bank has declined to talk to possible bidders for retail store Arnotts, according to interested parties.

A consortium of investors based overseas is understood to have made an approach to the deeply indebted bank in recent weeks expressing interest in buying the entire business of Arnotts. According to a source close to the consortium, the approach has been rebuffed by top figures in the new Anglo hierarchy.

Insiders at Anglo suggest that they are not yet ready to put Arnotts on the block, insisting that if they sell Arnotts it will be a "competitive process". Nevertheless they concede that "every asset is for sale at a price".

According to impeccable sources, Anglo has received three serious calls with an interest in buying Arnotts but senior executives are pleading that they need time to stabilise the business. One banker said: "We have transferred from lenders to owners and Arnotts needs radical surgery."

Anglo Irish Bank and Ulster Bank took over Arnotts in August as part of a deal to save the overborrowed Henry Street store, which has clocked up debts of more than €260m. Both banks were backers of Arnotts' ill-fated, but highly ambitious, property play in Dublin's massive Northern Quarter development.

Anglo's decision to dive into the retail business has already raised eyebrows in political circles, particularly since the Government's recent agreement with the European Commission that the bank would be wound down over a period of time.

It was generally expected that Anglo's expansion into retail and its desire to take over Quinn Insurance would be reversed in the light of the change of policy forcing the bank to contract. Its earlier expansion plans were proposed at a time when its original good bank/bad bank model was still a live runner. The plan for Anglo to have a long-term future has since been dumped in favour of an orderly wind-down.

Last night, Labour Party finance spokeswoman Joan Burton said: "Anglo has enough problems with banking difficulties. I cannot see how they can seriously manage a department store. If they have credible bidders they should seriously look at them. It is not a good story that they are taking on major assets like Arnotts and Quinn Insurance."

The future of Arnotts was jeopardised by the plans for a €750m redevelopment of a 5.5 acre block, bordered by Henry Street, Middle Abbey Street, Liffey Street and O'Connell Street, into a new shopping entertainment and residential quarter. It was planned to include 47 shops, 14 cafes, restaurants and bars and 175 apartments.

The pressure on Anglo to sell its interest in Arnotts is likely to intensify in coming weeks as the cost of funds to Anglo is set to rise with the spike in the cost of borrowing to the Irish Government on world bond markets.

It is probable that the Department of Finance would prefer Anglo to dispose of its interest in Arnotts as soon as possible.

Estimates of the value of Arnotts vary between €120m and €180m, sums of money that the State would be reluctant to fund for longer than is absolutely necessary.

Sunday Independent

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