OPINION:BARRING AN adverse ruling by the Competition Authority, the €45.5 million acquisition of Siteserv by the Denis O'Brien controlled Isle of Man-registered Millington, is a done deal.

Although only a small number of non-institutional shareholders turned up at the egm last week to vote on the deal, lingering questions remain.

To recap: Siteserv is a broadly based support services group that had revenues of €92.2 million in the six months to the end of October last and generated a pretax profit of €1.1 million. Siteserv includes companies such as Sierra, a provider of services to ESB, Bord Gáis, Sky and UPC; Roankabin, a specialist of temporary structures; and Deborah Services, a British construction services group. But it was struggling under the weight of €150 million of debt to Anglo Irish Bank built up during a boom-era acquisition spree.

The board of Siteserv called on shareholders to approve the €45.5 million bid from Millington, even though at least two other parties suggested they were willing to pay more. Siteserv’s corporate advisers have, however, suggested that there were conditions attached to the other deals, which were at a preliminary stage.

Under the deal, shareholders, including the current management team, would share €5 million, while the State-owned Irish Bank Resolution Corporation, which is managing the Anglo run-down, would get just €40 million of its €150 million debt.

In many ways the involvement of O’Brien and his long-time lieutenant Leslie Buckley is a distraction. Since the publication of the Moriarty report, which found then minister for communications Michael Lowry “secured the winning” of the second mobile phone licence in 1995 for O’Brien’s Esat Digifone, media scrutiny of all his activities has been intense.

O’Brien’s bid for Siteserv came as a surprise, given that most of his investments are in media and telecoms. But Sierra’s business supplying services to telecoms and cable companies could benefit O’Brien, while Eventserv’s experience in infrastructure for outdoor events might have benefits for his radio and other media interests.

It will be interesting to see what O’Brien’s long-term plans for Siteserv are. Altrad, the French group that made an indicative €60 million bid in advance of the egm, has now expressed interest in buying some of Siteserv’s assets, and a sale in the UK may make sense for both sides.

The real fly in the ointment in all this is that State-owned IBRC is taking a €110 million writedown on its debt, while the shareholders get a tasty 96 per cent premium on what Siteserv’s shares last traded for.

IBRC has stayed quiet on the whole deal but one hopes its shareholder, the Government – and, by extension, the taxpayer – has asked for a robust explanation of a number of questions.

How was the sum of €5 million for shareholders arrived at and why was it felt it was needed to get the deal over the line? Did IBRC consider putting or threaten to put Siteserv into examinership or to appoint a receiver? Such a move would have ensured that a much larger proportion of the sale price flowed to the taxpayer, although it would have carried the risk that some of Siteserv’s major customers may have walked away. Certainly a corporate insolvency practitioner would not have charged €5 million to run an examinership or receivership. And IBRC doesn’t seem to have an issue playing tough with some of its borrowers, most notably Seán Quinn and his family who are the subject of litigation in several jurisdictions.

What was the rush to sell Siteserv? At the egm, management suggested that leaks to the press about a possible deal had meant the company was coming under pressure from its creditors. This seems at odds with almost every other sale of a company of any significance in Ireland in recent years, where corporate advisers quietly inform the press a firm is “on the block”. One of the advantages of the Millington deal, according to Siteserv’s management, is that it did not require the same level of due diligence as other bidders.

Altrad has apparently withdrawn its complaints to the Competition Authority and Director of Corporate Enforcement over the deal. Investigations by those bodies may have answered some of the lingering questions.

Given the billions in support the State has provided to IBRC, looking for answers on this deal does not seem unreasonable.