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US investors to take stake in Greenstar after €50m sale

IRISH-American businessman David McCourt and US billionaire Walter Scott, a long time collaborator of Warren Buffet, will take a stake in waste business Greenstar under a planned sale, the Irish Independent has learned.

The two are understood to be part of a joint bid for Greenstar alongside US private equity firm Gores Groups.

The group of US investors is in exclusive talks to buy the NTR-owned waste management and recycling business.

While NTR owns Greenstar, the deal is effectively being done with the banks, because the price paid will go to repay around €50m of Greenstar's €83m of bank debt.

The remaining debt will be written off under the scheme, clearing the US buyers to pick up the company debt free.

The Greenstar debt is owed to a syndicate of seven banks, including Bank of Ireland, Ulster Bank and Bank of Scotland.

The lenders will crystalise a loss if the deal goes ahead, but agreeing to a sale by owner NTR saves the banks the costs associated with actually taking control of the business themselves, and then selling it on.

Los Angelus based Gores Group is a specialist in such "distressed debt" takeovers.

The firm has teamed up with New York-based David McCourt's Granaghan McCourt in order to target Irish takeover deals.

Irish-American Mr McCourt is a long-time telecoms investor and sits on the North American advisory boards of both Shannon Development and UCD's Smurfit Business School.

His business partner Mr Scott is a construction and telecoms billionaire and sits on the board of Berkshire Hathaway alongside Warren Buffet -- known as the 'sage of Omaha' for his investment savvy.

Weekend news reports said the sale of Greenstar was expected to raise €50m -- a fraction of the €160m asking price when the company was put on the market two years ago.

NTR and Gores Group declined to comment on the deal.

Accounts filed for Greenstar subsidiary, Greenstar Environmental Services, earlier this year reveal that the main Greenstar Holdings had bank debt of €83m at the end of March 2011, and owed a further €35.5m to the majority shareholder, NTR.

The accounts state that Greenstar Holdings took an impairment charge of €49.9m in the 2011 accounts, and the net assets of the business were written down to €25.6m as a result.

The company breached its debt covenants as a result of the write-down, according to the accounts.

"Technically, at 31 March 2011, this means that the lenders could demand immediate repayment of the bank loans," the company stated.

In 2011, the company negotiated with lenders and was able to secure agreement that banks would not call in the loans, which fall due at the end of September, if a sale is not finalised in the meantime.

Last night sources said they expected a deal to close relatively quickly, but said the final mix of ownership had yet to be fully determined.

NTR is expected to retain a stake, as will the US investors.

Meanwhile, NTR itself has announced the appointment of One51 chief executive Alan Walsh to its board as a non-executive director.

The appointment takes effect from June. One51 owns just under 24pc of NTR.

Mr Walsh was formally appointed chief executive of One51 last November.

Irish Independent