South Wharf deal: The winners and losers

THOMAs Molloy

May 07 2009 04:46 AM

EVERY deal has winners and losers. The South Wharf deal will probably end up costing the taxpayer hundreds of millions of euros, but it also made the sellers rich. They are the investors who backed financier Paul Coulson and the state-owned Dublin Port Company.

Coulson and Dublin Port split the proceeds of the €411m sale in 2007, with Coulson's company, South Wharf, earning €273.6m and Dublin Port getting €138.4m.

Their windfall followed a lengthy dispute between Coulson's company, which was the site's leaseholder and Dublin Port which was the site's freeholder. That battle raged for years until two parties finally sold the land in 2006.

The biggest single winner was 57-year-old Coulson, who earned more than €30m from the transaction through his 3.8pc stake in the publicly listed South Wharf Plc and his one-third stake in long-time investment vehicle Yeoman. The rest went to the investors in the companies he runs, including about 1,300 small shareholders who had stuck with him through thick and thin.

Coulson came to control South Wharf Plc, which owned South Wharf's leasehold, when he applied his legendary skills to dismantling Ardagh, a publicly listed company that owned Irish Glass as well as glass companies in Italy and Britain. Back in 2002, few quite understood just how valuable the Irish Glass bottling plant would prove to be when Coulson took the company private in a complex deal that led to the loss of 375 jobs at the bottling plant.

That demerger was challenged by Coulson's long-time rival Sean Quinn, who tried and failed to gain control of Ardagh with a rival offer to shareholders. The two men have long battled to win share of the competitive glass market here and overseas. Quinn's glass-making operations ate into Ardagh's UK profits when Quinn opened a glass factory near Ardagh's factory, close to the English city of Chester. That rivalry took another twist last month when Quinn's plant was served with a court notice to cease production following a High Court action by Coulson.

Coincidentally, both Coulson and Quinn have been clients of Anglo Irish over the years. Quinn's expensive stake-building in Anglo Irish have been well documented in recent months. Coulson turned to the bank in 2007 when Ardagh bought UK glass maker Rexam with a €320m debt facility from a syndicate of banks led by Anglo Irish. Coulson also had a business relationship with former Dublin Docklands Development Authority chairman and Anglo Irish Bank director Lar Bradshaw. The two men are investors in a development in Sandyford together with former Anglo chairman Sean FitzPatrick.

The other beneficiary was Dublin Port Company which is a private limited company wholly owned by the State. The company, which is responsible for the port's management, employs 161 staff and handles over 50pc of all Ireland's imports and exports. The company's windfall meant that the port was able to expand and invest, helping trade at a time when exports are falling.