Tuesday 23 July 2019

Richard Curran: 'Sean Quinn family have played a bad poker hand very well'

The Quinn children, Aoife, Brenda, Ciara, Colette (partially hidden) and Sean Jr at the Four Courts. Photo: Collins Courts
The Quinn children, Aoife, Brenda, Ciara, Colette (partially hidden) and Sean Jr at the Four Courts. Photo: Collins Courts
Richard Curran

Richard Curran

It was billed as one of the biggest litigation cases in Irish corporate history. Some 49 witnesses were due to be called. The case was expected to last for six months. The legal bills had already run into millions, and that was before it even got going.

Yet the legal action against IBRC, taken by the children of Fermanagh entrepreneur and former billionaire Sean Quinn was the ultimate damp squib. It was settled this week after a series of negotiations.

The outcome was positive for the Quinns even though their legal case, claiming they had signed €415m worth of loan guarantees under duress from the bank or through undue influence of their father, looked like it had been blown out of the water early on.

The outcome was also positive for IBRC in so far as it no longer has this family litigation hanging around.

The liquidators of the former Anglo Irish Bank were in the process of taking their own counter legal actions against the Quinn children alleging they had been involved in a conspiracy to put assets beyond the reach of the liquidators.

Good result for the Quinns, good for the liquidators, but not good for the taxpayer.

The misadventure of trying to secure proper title and control of the Quinn's international property empire has cost taxpayers an estimated €170m. The property portfolio should have yielded the taxpayer around €500m which would have come off the €2.8bn hit the bank took from Sean Quinn's CFD debacle.

The yield from the sale of these assets may now be less than €300m, leaving a deficit to the taxpayer of around €2.5bn. That hit does not include the €1bn insurance customers are paying in a special levy to cover the collapse of Quinn Insurance.

It is a €3.5bn hit for all of us because of the mistakes made by Sean Quinn, a handful of bankers and poor regulation. The administrators of Quinn Insurance have a legal action against the auditors. Pending the outcome of that case it is not possible to ascribe blame to them and the case is being vigorously defended.

The Quinn children were the owners of the empire their father built up. He ran it but they owned Quinn Group with its cement, glass and radiator manufacturing operations. They were the ultimate owners of the insurance business that collapsed. They even owned the family home their parents live in back in Ballyconnell in Co Cavan.

But dad blew it all when he lost around €3bn on CFDs in Anglo. The question that has to be asked though is how come they get to keep whatever assets they have left, after they signed personal guarantees of €415m?

Others, from hapless borrowers to unfortunate wealth and employment creators, have not been so fortunate.

The settlement reached during the week saw the family agree to judgements registered against them of €88m each.

However there is a stay on those judgements if they agree to assist IBRC in securing the last pieces of the property empire and they provide information on what happened to various assets and monies that had been within the property group.

Back in 2012 the Quinn children were injuncted by the courts from interfering in any way with the property assets and IBRC's attempts to secure them. Sean Quinn senior and his son Sean junior, ended up in prison for contempt of court, until they purged themselves of that contempt.

Assuming that was the only contempt of court that took place, although IBRC had built up a large legal action claiming otherwise, all the Quinns have to do is precisely what they were instructed by the courts to do several years ago.

In return, their €415m in personal guarantees, are effectively wiped out. Described by some as having a 'sword of Damocles' hanging over them, the settlement delivers the opposite.

It removes the 'sword of Damocles' that was hanging over them since 2008 when Anglo shares collapsed after they had guaranteed these loans. The sword is lifted. All they have to do is help the liquidators.

Perhaps there is more detail to that process in the settlement agreement but we have not been told because elements of the deal are confidential. This seems utterly ridiculous given the enormous sums of taxpayer money involved and the public interest issues at stake.

Based on the published terms of the settlement, whatever the Quinn children own, they keep, as long as they assist the liquidators. We have no idea what their net worth is.

They are free to get back into business again and perhaps raise the money to buy back some of the former family assets and firms.

The cement group has been acquired by local investors backed by a consortium of US hedge funds. They paid €98m for it, at a time when its net assets were valued at €113m. They won't be long-term holders. The glass business was bought by a Spanish firm. Liberty Insurance bought the insurance business for €1 but agreed to put around €100m of new money into it.

As IBRC mops up the last of the international property portfolio and finds buyers for it, one asset sticks out. The Slieve Russell Hotel remains in the ownership of receivers and has not been sold.

Given the number of hotels to have changed hands since 2013, it would have made a very good acquisition but for whatever reason, ownership has not changed hands.

This settlement deal clears the way for a member or members of the Quinn family to have a crack at buying back that hotel if they can raise the funds. Presumably the receivers won't want to own it forever. The Quinn children will no longer have €415m in personal guarantees hanging over them once they assist the IBRC liquidators.

Sean Quinn can stay in his family home, as his children will avoid bankruptcy with this settlement.

At the height of the boom Sean Quinn talked about playing poker at the local pub with old friends even at a time when he was worth €3bn.

When it comes to the family, the Quinns have played a very bad hand, very well.

Hibernia to return flip money

Hibernia Reit has decided that if its shares are trading at very low levels, even well below its net asset value, it might as well buy some of its stock itself. The company bagged a 15pc return in just a year after buying an office block in Sir John Rogerson's Quay for €28.7m and then selling it for €35.5m.

Flipping office blocks isn't exactly what listed Reits are supposed to do, but it seems they couldn't help themselves, having made a nice few quid on it. Hibernia has decided to give the money back to shareholders as part of a larger €25m share buyback programme.

The move makes sense and should help with a lagging share price. Despite the buoyant office and development market in Dublin, a company like Hibernia is trading at below net asset value.

The fear of darker clouds on the horizon from Brexit and global markets, to possible downturns in the UK, the US and even China, all affect investor sentiment.

Hibernia appears undervalued but would you bet on all those other things coming up roses?

Sunday Indo Business

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