Inside the world of business
Dunne is going to need all his nerve in Ballsbridge game
SÉAN DUNNE might have felt some affinity with the large crowd that turned up at his D4 Hotel last weekend for a poker classic. Dunne bet more than once on the Irish property market during the boom, not least when he bought the D4/Berkeley site in Dublin’s Ballsbridge for a total of €375 million.
His bankers have now joined him at the table by taking a stake in those properties. The syndicate, led by Ulster Bank, had security for the cash they loaned him to buy the property – the debt comes to around two-thirds of the total purchase price, as Dunne put in €125 million of his own money.
But banks don’t normally own hotels or development sites. They loan other people money to do that, and secure this against the assets. The security is meant as just that, security for their money and the interest they charge, which is their return for providing the finance.
By taking a stake in the properties, the banks are sharing both the benefits and the risks, a very different arrangement from securing a loan against an asset, which only really entitles you to recover your debt and the interest due.
The move could be interpreted in a lot of ways. One is that they want more control but that does not look like the case here as Dunne’s operation, Mountbrook, continues to run the hotels and manage the planning process for the site’s eventual redevelopment.
Bankers don’t know much about the nuts and bolts of those activities, which is why they provide finance to people who do.
The other interpretation is that the banks, like Dunne, believe that the bet on Ballsbridge will pay off in the long term, even if the rewards may not be as spectacular as they once thought, and that wedding themselves to him in this way represents the best way of sharing in those rewards and getting a return.
But there’s a long way to go before the site’s potential is realised. Local councillors have refused permission for his proposals for the site, and An Bord Pleanála will now decide on it.
Dunne is going to need all the nerve of the smartest poker player to steer his way through the next few hands of the Ballsbridge game.
Sum of knowledge
There was a moment on Thursday when the cheerless business of the Committee of Public Accounts promised just a little something more. John Corrigan, the newly-installed chief executive of the National Treasury Management Agency, was asked if he was the highest-paid public servant in the land. The room held its breath as he almost looked like he was about to answer before the question was withdrawn and quiet boredom descended once more.
By this stage, Corrigan and his top team had fended off query after query on the banks, dividends, dates and even the occasional question about pensions, the ostensible reason for their attendance at the committee.
They managed to conduct themselves with erudite good humour throughout, despite having to endure an hour-long wait for the meeting to begin, while TDs held a private session. Bear in mind that an hour of these people’s time costs the State quite a substantial pot of cash and is probably better spent in places other than a Dáil waiting room.
More meaningful, however, is the question of how valuable the accountability as demonstrated by the Committee of Public Accounts is to the State as a whole.
In theory, the appearance of the NTMA before the committee is a good thing: these people have their fingers in lots of pies containing lots of our money and they should expect to explain themselves to the representatives of the people.
The problem comes in valuing that accountability, or in working out how effective those guarding it can actually be. The interrogation of Corrigan by the PAC this week certainly did not add hugely to the sum of human knowledge on the NTMA, pensions or the relationship between the two.
The matter becomes particularly pressing when one recalls that the same committee is due to take on oversight of the National Asset Management Agency when its operations kick off shortly.
Rupert will be pleased
When it comes to digital terrestrial television (DTT), Green Party minister for communications Eamon Ryan has struggled to articulate himself clearly. Last week, he trumpeted a deal with his British counterparts in relation to carrying terrestrial channels on the respective DTT platforms north and south of the Border. Little did he know he was stirring up a hornets nest with pay-TV operators here, particularly NTL/Chorus and Sky.
The memorandum committed the Government to facilitating “BBC services in Ireland on a free-to-air basis”, according to a release from the department of communications. In return, RTÉ and TG4 would be available on a free-to-air basis in the North. NTL/Chorus and Sky fork out millions of euro each year to the BBC to carry its channels. The Beeb is hugely popular in the Republic and helps to sell subscriptions for the pay TV companies.
So they weren’t impressed when Ryan appeared to pull the rug from under them.
Lo and behold, the Department of Communications this week amended the text of the release. It now reads: “The memorandum commits the two governments to facilitating the widespread availability of RTE services in Northern Ireland on a free-to-air basis and BBC services in Ireland on a paid-for basis.”
Rupert Murdoch will be pleased.
TODAY
Euro-zone finance ministers meet tonight to discuss the measures that might be used in any support of the Greek government in line with the reassurance given last week by EU heads of state.
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