Another good week for Nama?

It isn't popular to praise Nama, but sometimes the state's favourite bad bank almost forces us into it. A muted welcome therefore for yesterday's news that Nama and new friends Kennedy Wilson are breathing life into defunct plans to construct the so-called U2 tower, some five years after the original vision for the property dissolved in the fog of the financial crisis.

The new joint plans, to develop five acres in Dublin’s docklands, would see the scale of the tower roughly halved – offering a more suitable reflection of our new economic reality and probably a more viable project.

The fact that the agency has been sufficiently nimble and eager to jump into bed with Kennedy Wilson, as it recently has with others including Bennett Construction and Oaktree Capital, is positive – at least in the context that a dynamic Nama is better than a sedentary one, even if such strategies have attendant risks. We will be crossing our fingers.

More quantifiably positive for the agency this week was news that it was to receive up to €100 million in relation to Treasury Holdings and its former chieftains Johnny Ronan and Richard Barrett. The money is to flow in as a result of agreements that avoided the need for litigation, another pleasing factor, albeit one that must be tempered by the less fruitful billions in debt housed by Nama.

And to top it off, the agency is receiving some international recognition through the appointment of its chairman Frank Daly to a senior tax advisory role in Greece. It's not exactly the pinnacle of international finance, but it does illustrate how far Ireland and its agencies have come in differentiating themselves from other financially troubled spots. Hurrah?


Dividend strategy causes divisions
The Government this week has been knocking on the door of various State-owned companies looking for cash. It's all part of a plan agreed in the budget to get €100 million in extra dividends from businesses in which it is either the sole or the 90 per cent-plus shareholder.

Three days ago, the ESB confirmed that the Minister for Communications, Energy and Natural Resources, Pat Rabbitte, wrote to it seeking an extra €65 million from the company, on top of the €74.4 million it recently handed over to the Exchequer following its annual general meeting.

Similar requests have been made of two other companies under Mr Rabbitte’s remit, Bord Gáis and Bord na Móna, although neither has said just how much is being sought. Their boards are considering the request, as is the ESB’s.

The ESB is the largest and is being asked for the lion’s share. Contributions from it and Bord Gáis, which has already paid €24 million in a regular dividend this year, would probably bring the figure very close to €100 million.

Apart from that those two, there is Dublin Airport Authority, but it is focusing on paying down its debt, and the 25 per cent sake in Aer Lingus, which delivered €5.36 million this year.

Then there is a motley crew consisting of Bord na Móna, Coillte, the ports, even the Irish Aviation Authority, which recently paid €5 million to the Exchequer, its first dividend for a number of years. These could be tapped for varying sums as well.

This could be seen as a one-off, simply a cash-strapped Government looking for money from whatever source is available to it. But there was an interesting line in the ESB’s statement dealing with Rabbitte’s letter.

This was to the effect that the Government and NewEra are jointly reviewing a dividend policy for the ESB.

The Minister intends getting in touch with the State behemoth again to discuss this further.

This all harks back to a report into State-owned companies and assets completed by a group chaired by economist Colm McCarthy. The report was commissioned and published during the lifetime of the last government, but provided the template for the current administration’s disposal strategy, including the aborted plan to sell Coillte’s harvesting rights.

Another point it highlighted was the need for measures designed to ensure the State gets a bigger share of its companies' profits. It appears that the current Government has taken this suggestion to heart as well.


New Homebase bidder changes game
The emergence of an as yet unidentified "independent" potential bidder for Homebase's Irish stores was clearly not part of the Home Retail Group's cunning plan. They presumably had hoped to follow the path beaten by B&Q which bought its Irish business back once the leases on its stores had been renegotiated for it by an examiner.

Homebase clearly had its problems here. Sales had fallen by 31 per cent since 2009 and the business had been unprofitable for each of the past five years despite remedial action taken by management. It is arguable that what it is doing is is a misuse of the examinership process but at the same time it is a pragmatic solution to the problem created by the widespread inclusion of upward-only rent reviews in boom-time leases .

These, combined with unrealistic expectations on the part of landlords, particularly when the tenant is a blue-chip international retailer, have left the likes of Homebase and B&Q with few other options. It is also worth noting that the restructuring of B&Q involved the writing off of a significant amount of intercompany debt and something similar is on the cards with Homebase.

But as yesterday’s news reminded us, examinership is a court process and the object is to preserve the company, rather than facilitate the restructuring of Irish subsidiaries of UK multiples.

The examiner Kieran Wallace (left) will presumably have to bear this in mind when he judges which of the two proposals is the most viable.

That said it is hard to see anyone trumping Homebase’s UK parent, not least because it is the biggest creditor of the Irish operation and as such can oppose any scheme. Although it would find itself in a tricky situation having triggered the examinership to begin with.

It promises to be interesting and much will depend on who the mystery investor turns out to be. Should they be revealed as another international group that would have the capacity to step into Home Retail’s shoes in Ireland it could leave the Milton Keynes-based group with a lot of egg on its face.