Personal guarantees a cloud over developers, says O'Flynn
Many of the country's main developers want to restructure their companies and accept equity investment, but are prevented by previous personal guarantees they gave banks, leading developer Michael O'Flynn has said.
Mr O'Flynn, chairman and managing director of the O'Flynn Group, has already done one deal with a private equity house and is believed to be in discussions with two other firms.
But others in the industry are unable to access such funding because lenders hold large personal guarantees over them which can be called in, often at their discretion. The issue will need to be addressed in some way for the property market to recover, Mr O'Flynn says in an interview today with the Irish Independent. His own company had no personal guarantee issues, he added.
Mr O'Flynn said the funding model for development companies was going to change, with equity becoming more popular than debt. Only companies with strong management and good corporate governance standards were likely to receive such investment.
Mr O'Flynn, who is on the NAMA committee of the Construction Industry Federation, also said NAMA should not just be a disposal agency or a "blunt instrument". The agency was in danger of being under-capitalised and this would not serve taxpayers well in the long term.
Mr O'Flynn was recently refused planning permission on a major housing project in Dunkettle, Co Cork, after objections from the National Roads Authority. He said he may seek a judicial review of this decision. "We did everything that was asked of us,'' he said.
Interview Page 5