Anglo's chances of €2.8bn Quinn debt repayment shrink as bidders emerge

STATE-OWNED Anglo Irish Bank’s chances of being repaid a €2.8 billion debt owed by the owners of Quinn Insurance receded yesterday as at least two rivals emerged as possible bidders for the company.

Quinn Insurance, owned by businessman Seán Quinn and his family, is under the control of administrators after it was last month found to have broken solvency rules imposed by the State’s financial regulator.

Yesterday it appeared that at least two companies may bid for the company, French-owned Allianz and Irish operator FBD.

Sources close to both Quinn and Anglo Irish acknowledged yesterday that a sale to any third party would considerably lessen the Quinn family’s chances of repaying a €2.8 billion debt to the bank.

The State-owned financial institution has been attempting to get a €700 million rescue deal for the company across the line in a bid to recover the debt.

Quinn Insurance is the family’s main asset, and Mr Quinn has already confirmed that its ability to repay the debt depends on maintaining ownership of the company.

The insurance company owes €600 million to bondholders in the US. One source explained that they, and not the shareholders, would probably be paid first.

Unless the debt can be dealt with some other way, this would leave the Quinn family with few resources to pay off the Anglo loan.

The bank could have the option of pursuing other Quinn assets, which include high-profile properties such as Hilton hotels in Prague and Sofia, a quarrying and building materials manufacturing business, and glass production.

“They could go after some of the trophy properties, or start a sell-off of the manufacturing businesses, but it’s only likely that they would recover a few hundred million,” one source said.

If the bank were to fail to recover its debt, the ultimate burden could shift back on the taxpayer.

The State is in the process of recapitalising the bank, which it took over last year when the institution became the biggest Irish casualty of the collapse in property and construction markets in 2008.

The latest estimate of the final cost of this is €22 billion. The loss of the Quinn debt would mean that the State could have to pump more cash over and above this amount into the bank.

Anglo’s plan involves swapping €600 million owed by Quinn Insurance to the US bondholders for €550 million in Irish Government bonds and putting €150 million into the company itself to ensure that it meets solvency requirements.

The bank’s ultimate aim would then be to sell on the business.

Anglo is still in talks with administrators Paul McCann and Michael McAteer of Grant Thornton, the Government and the regulator about the possibility of concluding the rescue deal.