Oaktree plan for McInerney remains on course

US FUND Oaktree Capital’s plans to invest in troubled house builder McInerney Homes will not be affected by the decision of two banks to take control of the group’s British business.

Lloyds and Royal Bank of Scotland appointed KPMG as administrators to McInerney’s British businesses yesterday on foot of a €90 million debt.

Most of McInerney’s Irish business is under the courts’ protection pending the outcome of an appeal against the High Court’s recent refusal to approve a rescue plan for the business prepared by examiner Bill O’Riordan of PricewaterhouseCoopers.

Oaktree Capital is backing the plan, which could involve an investment of up to €48 million. It is understood the fund is still interested in investing in the Irish business, despite the banks’ move against the British operations.

Oaktree originally planned to invest in McInerney’s Irish and British divisions but those plans changed as the examinership process, which began last September, dragged on.

The fund believes the Irish business, which specialises in building family homes in established residential centres, offers the best long-term value.

The British banks’ move will not affect the Supreme Court appeal, which is due to go ahead early next month.

The High Court refused to approve the rescue plan as it ruled that the proposals, which involved paying three banks €25 million in full settlement of a €113 million debt, was unfairly prejudicial to the interests of one of them, KBC.

The €80 million share of the debt due to the other lenders, Bank of Ireland and Anglo Irish, is likely to fall under the control of State agency Nama.

KPMG partners Richard Heis, Paul Dumbell and Brian Green formally took control of the group’s British operations yesterday following a court hearing.

McInerney Homes British division is based in Wigan, but has offices in Leeds, Durham, Wolverhampton and Northampton and development sites around Yorkshire and England’s northwest, midlands and northeast regions.

The administrators have control of seven companies. They intend transferring a number of the private development sites to a solvent entity within the group, Ludgate Hill Developments, in order to maximise the creditors’ returns.

They have also agreed a deal under which former McInerney managers will take control of a business that works primarily for housing associations.

The banks’ decision to appoint administrators resulted in the loss of 14 jobs at the group’s contracting business, William Hargreaves.