Thursday 23 November 2017

Disputed loan was only one of many investor took out at time

Siobhan Creaton

Businessman Philip Lynch had taken out several millions euro worth of loans to invest in shares and international property around the same time his family joined Gerry Conlan to borrow €25m for a site in Waterford, the court heard.

As he continued to give evidence about the disputed €25m loan yesterday, Mr Lynch said that while he had the "wherewithal" to put between €10m and €12m in cash into the Waterford deal in 2007 he opted to borrow the money with Mr Conlan from AIB on the basis that it was a "no risk" non recourse loan. The bank is now pursuing his family to repay the money.

In the course of his evidence, the court heard that Mr Lynch was borrowing money from various banks to finance a wide range of investments.

Anglo Irish Bank had offered him a €6.5m loan for his personal use that was secured on the shares he owned in his former company, IAWS plc. His daughter Judith Whelan, who was handling the family's investments, outlined how he could use these funds and stated there would be €3.5m for him "to play with". Mr Lynch said he didn't know what she meant by that comment.

He intended to use €1m of the Anglo funds to pay down part of his €2m overdraft and was considering putting another €500,000 into an investment fund being promoted by the bank.

Anglo would later extend Mr Lynch's credit facility to over €8m, although all of the funds may not have been drawn down. Mr Lynch said whatever had been borrowed from Anglo had been repaid.

Separately he borrowed $1m (€707,000) to invest in the buyout of the Sawgrass Marriott Golf and Spa resort in Florida put together by property developer Paddy Kelly and financier Niall McFadden. It was given Chapter 11 protection by a bankruptcy court in Florida last year. Mr Lynch said he didn't know what his investment was now worth. That $1m he borrowed is due to be repaid in full by next July. Mr Lynch said yesterday he wasn't sure whether it had been repaid.

He also borrowed €1.5m from Ulster Bank to buy shares in e-learning company ThirdForce plc. This loan was secured against an apartment he owned at the K Club in Kildare. He told the court he thought this loan had been repaid. In addition, Ulster Bank offered him a £600,000 loan for a high-yield property investment scheme in London, which he said "has worked very well".

And AIB offered Mr Lynch and another acquaintance, Ronan O'Caoimh, €17.4m to buy a 120,000sq ft office block in Hamburg, Germany, with the bank demanding the two men should provide personal guarantees to repay the money.

Mr Lynch didn't go ahead with the loan. He later dealt with Haspa Bank in Germany, where he was offered a non recourse loan, he said. Paul Sreenan, counsel for LK Shields, suggested this was after he "went into default" on the deal, but Mr Lynch denied this. His wife Eileen had borrowed a €1m loan from Bank of Ireland Private Banking to buy shares in One51, the company, Mr Lynch now heads. The bank wanted him to guarantee that loan but Mr Lynch said he didn't recall giving that undertaking and said it had since been repaid.

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