THE LEAKING of Kaupthing Bank’s loan book on Wikileaks.org has shed some light on the Icelandic bank’s business dealings with Carlow property developer Seán Dunne.
Kaupthing’s exposure to Dunne is €84.1 million, according to the leaked document, which dates back to September 2008 and was presented to the bank’s board of directors.
The lion’s share of this relates to the Icelandic bank’s participation in a €326 million syndicated loan facility led by Ulster Bank to finance the Irish developer’s purchase of the two former Jurys Doyle hotels in Ballsbridge a few years back.
The hotels were subsequently valued at €520 million, giving an overall loan-to-value ratio for the banking syndicate of 62.8 per cent. Dunne provided a guarantee of €250 million to the banks.
The failed Icelandic bank also gave Zaskari Ltd $2.75 million (€1.92 million) to finance a 1/16th share in a Gulfstream G550 through the NetJets fractional ownership scheme, for “the benefit of Mr Dunne”, the leaked document states. NetJets is owned by Warren Buffett.
The “subjective” rating attached to Kaupthing’s exposure to Dunne is described in the document as “good”. This is bizarre given that in September 2008 it was as clear as mud that the hotels were worth nothing like €520 million following the collapse of the Irish property market and the slump in the economy.
The document adds: “The client [Dunne] is currently appealing a decision to refuse planning consent on two elements of the proposed redevelop scheme.
“A final decision is expected within 12 months. It is anticipated that the banks will be asked to increase the facility to cover further interest roll-up and predevelopment costs.”
Dunne’s planning appeal failed and Kaupthing has since been nationalised. It’s a sorry mess.
