THE extent of the problems facing Nama became a little bit clearer last Friday when Real Estate Opportunities -- the unfortunately named UK-listed property company controlled by Johnny Ronan and Richard Barrett's Treasury Holdings, -- published its half-year results.
These showed that REO's liabilities exceed its assets by over stg£750m.
If anyone doubted that REO was bust, the latest set of results, which cover the half-year to the end of August, will have put the matter beyond doubt. These show bank loans of stg£1.29bn, of which three-quarters (stg£974m) fall due for repayment within the next 12 months.
Unfortunately for REO that isn't the full extent of its problems. It also has bonds with a face value of stg£247m, which must be repaid by end of May 2011.
Further complicating matters are preference shares with a face value of stg£127m and an exposure to financial derivatives of a further stg£74m.
As against that REO has property which it claims is worth stg£1.05bn. REO has properties with a claimed value of stg£609m in Ireland and stg£440m in the UK. Even if these valuations prove to be realistic, and that could prove to be a very big 'if', that still leaves REO with a net asset deficiency of stg£755m.
All of which means that, by the time Nama's bondholders and foreign lenders have picked over the carcass, Nama is going to be facing a hefty write-down on the loans to REO it has bought from the Irish-owned banks while its shareholders will be wiped. At even the current stg2.5p price, which values the REO equity at just stg£8.5m, the shares are still expensive.