Collapse threatens Irish companies of Howard Holdings

ACCOUNTS FOR the main Irish property companies of Howard Holdings show the directors have acknowledged that the collapse in asset values and shortage of bank finance threaten the group’s future.

The most recent accounts for Howard Property Ireland show the group was €27 million in the red at the end of its 2010 financial year and had debts of almost €32 million, the bulk of which it owed to its banks.

The group transferred debts owing to Anglo Irish Bank to State agency Nama last December. Anglo had a €12.5 million charge over book debts and a number of other secured loans.

In March, the British high court put London-based Howard Holdings plc, the holding company for the Irish property development group, in liquidation. The plc stopped trading in August 2009.

A directors’ report, signed by Greg Coughlan, Brian Madden and Jason Clerkin, accompanying accounts recently lodged for Howard Property Ireland show that its board believes it faces significant risks.

“As the parent company is no longer operational; the investments that it holds are backed by property assets which have fallen in value; and the ability to secure ongoing banking facilities is in question, the assessment of the board of directors is that the principal risk associated with the company is its ability to continue to operate given these circumstances,” the report states.

The accounts show that that Howard Property Ireland’s liabilities outstripped its assets by €27.8 million at the end of April 2010. Net debt was €31.9 million.

The company’s operations lost €1.27 million. But after an adjustment of inter-company loans and interest payments, it recorded profits of €1.26 million.

The company prepared and filed accounts for 2008, 2009 and 2010 together. The 2008 figures show that it wrote over €11 million off the value of its properties and lost more than €20 million that year.

Its auditors, PFK O’Connor, Leddy Holmes, say the uncertainty created by the collapsed property market and the transfer of loans to Nama, meant they were unable to indicate if the 2010 accounts gave a true and fair view of the company’s financial affairs.

The auditors point out that there are problems with the group’s corporate structure.

Early last year, Luxembourg-registered Loparco secured a High Court judgement for €28 million against Mr Coughlan, Mr Madden and against Howard shareholder Brendan Murtagh.

Howard was one of the better known property players during the boom. At one stage it had assets of €4 billion under development and was the main private investor behind the proposed €1 billion redevelopment of Cork city docks.

The company successfully redeveloped the Lapp’s Quay area of Cork city and last year, the city’s outgoing manager Joe Gavin praised it for its contribution.

Another firm, Clowater Asset Management, whose directors include Mr Clerkin, has taken over some of Howard Holdings’s projects. Last year it said it was willing to proceed with the development of a 5,000-seat event centre, close to Páirc Uí Chaoimh.