Sunday 22 April 2018

Irish tycoons go for the jugular in battle for hotels

Struggle over hotels reaches peak of bitterness

Claridges in London
Paddy McKillen
Derek Quinlan

RONALD QUINLAN Special Correspondent

PROPERTY tycoon Paddy McKillen's titanic tussle with the billionaire Barclay brothers for control of the world-famous Claridge's, Connaught and Berkeley hotels descended into open warfare this weekend.

As the battle intensifies for outright control of Coroin (the company behind the three hotels), the Belfast-born businessman has come out to defend himself against a blistering attack from Sir Frederick and Sir David Barclay's key ally – the high-flying financier Derek Quinlan.

Mr Quinlan, whose 35 per cent share in Coroin is effectively controlled by the Barclays through the ownership of his debt, broke his silence in the wake of the decision last week by the Supreme Court in London to refuse Mr McKillen leave to appeal a decision by another court over the future of the €1.2bn company.

In the course of welcoming the court's decision, he let fly at Mr McKillen, accusing him of being engaged in an "ongoing campaign" against him which he described as "absolutely hopeless and doomed to failure".

"It is unfortunate that Mr McKillen's behaviour against me has become somewhat obsessive. Surely he has more pressing concerns, such as finding a way to repay his huge debts to the Irish State?" Mr Quinlan said while acknowledging that he too still owes a significant amount to the taxpayer by virtue of his Nama debt.

"It would be in everybody's interests, including his own [Mr McKillen's], if he could move on to more productive pursuits," Mr Quinlan added.

Unsurprisingly, those comments provoked an equally abrasive response from Mr McKillen.

Pointing to the role his fellow Irishman had played in assisting the Barclay brothers, he said: "Derek Quinlan is complaining about a situation that he created and I have been forced to defend against. He joined with the Barclays who planned to make a profit of hundreds of millions from the deal," said Mr McKillen. "Their hostile takeover was launched almost three years ago and I have been forced to defend against their actions since then through the courts. I have no intention of giving up and will continue to take whatever legal action is needed to protect my business."

Comparing his situation with that of Mr Quinlan who left Ireland for Switzerland in 2009 for "tax and personal reasons" before moving to London and more recently to Abu Dhabi, Mr McKillen added: "I run a profitable and successful business that directly employs over 750 people in Ireland and has also created another 1,300 jobs over the last number of years.

"Those businesses contribute millions to the Irish State every year in taxes. All of my loans are performing and I have worked tirelessly over the past number of years to repay my loans 100 per cent and refinance them away from Ireland. I have not cost the State a cent and have given it millions."

Derek Quinlan, for his part, claimed to have reduced his own debts to Nama and his various creditor banks by €3bn since 2009.

Clearly proud of this, the financier once known as Ireland's own 'King Midas' expressed his surprise at an advertisement in the Daily Telegraph last week in which former clients and investors of his who had lost money as "a direct or indirect result" of their investments with him were invited to come forward and join in a legal action for the recovery of their losses.

"I was most surprised to see the advertisement, as I have been diligent in dealing with my creditors and all investment projects with which I was associated in the past were conducted with the utmost financial probity with all risk explained to the investors at the time of the investment.

"It is regrettable that losses were made but this is the nature of risk and return, particularly given the difficulties experienced in the Irish economy," he said.

Asked if he had any idea who had placed the advert in the newspaper which is owned by the Barclay brothers, Mr Quinlan said: "I can't say for sure who was behind the advert in the Daily Telegraph."

The financier was highly critical of the coverage afforded to his affairs in the Sunday Independent, saying: "Paddy McKillen has been helped hugely by support from Ronald Quinlan in the Sunday Independent. But I think most people are now seeing through it all and understand that I have focused since 2009 on selling assets and paying back my creditor banks and Nama."

Mr Quinlan's financial strength or otherwise has a direct relevance to the battle for control of Claridge's, the Berkeley and Connaught hotels. Under the so-called pre-emption clause of the Coroin shareholders' agreement, should the financier or any other of the company's shareholders seek to sell or transfer ownership of their shares in the iconic London hotels, those shares must be offered on a pro-rata basis to existing shareholders.

Should a shareholder default on the repayment of a debt or be declared bankrupt, their shares must be offered for sale in the same manner.

In the case of Derek Quinlan, Paddy McKillen firmly believes that without the ongoing financial support of the Barclay brothers, the financier's solvency would be under threat, triggering a sale of his shares.

He said: "The Barclays have invested approximately £400m to get a 28 per cent shareholding and they must continue their financial and costly support of Derek Quinlan to avoid pre-emption being triggered which would allow me to become the majority shareholder with 56 per cent.

"The Barclays' arrangement with Derek Quinlan is very expensive for them. This arrangement cannot continue forever and is not sustainable. I am willing to sit it out for as long as it takes until Derek Quinlan's shares become enforceable or he attempts to transfer ownership. I have the funds in place to buy the shares."

However, Mr McKillen's criticisms weren't reserved solely for Mr Quinlan.

When asked about the role he believed Nama had played in his battle with the Barclays, he added: "They could never have attempted this very aggressive hostile takeover of the hotels if they had not been facilitated and supported by Nama."

Asked for its response to that particular allegation, a spokesman for Nama declined to comment.

Commenting on the decision of the Supreme Court in London last week to refuse him leave to appeal, Mr McKillen said: "It's not a major setback and it hasn't changed my resolve to continue to protect my business."

Sunday Independent

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