Anglo to take control of struggling Arnotts
Top store owes €260m but 950 jobs not on line
STATE-owned Anglo Irish Bank is to take control of Arnotts, the historic Dublin department store struggling to pay huge debts of €260m.
In a surprising twist to the banking saga, Anglo, which was bailed out by taxpayers, is now set to control the iconic department store, which opened in 1843.
Anglo, which is receiving €22bn of taxpayers' money, has informed the EU Commission it intends to have "joint control" over Arnotts, along with fellow lender Ulster Bank.
From this morning, the banks will take effective control of the shop. But the store will open for business as usual. It is understood that none of the company's 950 jobs is under threat.
The two banks have lent the department store €260m and a radical deal to restructure these debts is now on the cards as the bank tries to claw back as much cash as possible, sources confirmed last night.
The two banks are not expected to run the store on a day-to-day basis, but will have a major influence over its future plans. Because Anglo Irish Bank is state-owned, the EU Commission has to approve the deal and any objections have to be submitted by August 9.
Anglo Irish declined to comment last night on its plans, citing "client confidentiality". The bank is seeking to recover as much value as possible for the taxpayer from borrowers who have found it difficult to meet their loan repayments, among them Arnotts Holdings, the firm that runs the store.
Earlier this year, Arnotts reached a deal on its debts that saw Ulster Bank and Anglo injecting more money into the company. The debts were run up by Arnotts on its Northern Quarter development in Dublin's city centre.
The company had proposed a huge €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.
The quarter was to have 47 shops and 14 cafes, restaurants and bars, around 175 apartments and a four-star hotel.
Arnotts also went ahead with a trendy new store in the Jervis Centre. That closed this year.
Sources said while this debt deal remained in place, a wider restructuring deal is on the cards between Arnotts and its lenders. The department store could not make anyone available last night to discuss its future relationship with Anglo.
The company is 55pc owned by barrister Richard Nesbitt and his family, with the remainder of the shares held by Anglo Irish and Boundary Capital. Earlier this year, Boundary said it was facing a virtual wipe-out on its stake. Contacted last night by the Irish Independent, Mr Nesbitt declined to comment.
Earlier this year, Arnotts' marketing director Jayne O'Keeffe said: "It is standard practice for the banks to support the future direction of the business." At that stage the banks had opted not to convert their debts into shares in the company, but this may now change.