Inside the world of business
NTR US subsidiary poised to deny claim over rejected offer
NTR US subsidiary Greenstar has yet to submit a defence to claims made by its former chief executive, Matthew Delnick, that the Irish group’s directors refused a €330 million offer for the waste management business out of concern for their own positions.
Greenstar said at the weekend that it intends to submit a “robust defence” to Delnick’s claims, which it argues have no merit.
Delnick says that the NTR board, including chief executive Michael McNicholas and chairman and key shareholder Tom Roche, told him in late 2010 that the board would look favourably on any offer for Greenstar of more than $300 million and would take strong interest in a bid in the high $200 millions.
Last October, the US market’s biggest player, Waste Management, apparently issued a letter of intent offering to buy Greenstar for between $400 million and $420 million (€317-€333 million).
However, McNicholas and other executives allegedly said they would have to look for other jobs if the offer went ahead.
As with all these things, there is presumably another side to this story.
It will be interesting to see what its side is when Greenstar lodges its defence.
The proceedings against the NTR subsidiary were only issued at the end of last week, so that may take a while.
NTR’s fortunes have been mixed for the last few years. Last year, it wrote off €63 million against two of its Irish ventures, including waste manager Greenstar, which has no connection with the US business of the same name, and to which the banks appointed receiver David Carson last month.
Its ill-fated US solar power venture cost it a total €138 million in 2010 and 2011. It’s an investment that turned out to be ill-timed, with the financial crash and recession ensuring the banks were unwilling to fund such projects.
Given the rough ride that NTR had been having, an indication that someone was willing to pay $400 million for one of its businesses would presumably have been welcome news.
Will Burlo find buyer amid signs hotel room prices are edging up?
According to latest figures from Hotels.com, the average price of a hotel room in Dublin in the first half of this year rose by 3 per cent to €77 a night. This might actually be understating the growth, as many hoteliers in the capital are reporting rises of 5 or 6 per cent.
Either way, it’s a positive backdrop for Bank of Scotland (Ireland) as it tries to find a buyer for the Burlington Hotel in south Dublin. It’s remarkable to think that the 501-bed hotel is for sale in a range of €65 million to €75 million when you remember that developer Bernard McNamara paid €288 million for the site at the height of the property bubble.
McNamara planned to bulldoze the hotel and link it with an adjoining site that he also owned for a large property play.
That plan bit the dust and won’t be revived.
The Burlo, as it is affectionately known, is being sold as a hotel, albeit one past its heyday. The facade has a jaded look about it and many of the large chamber dinners, business events and GAA functions that were once a staple of its business have migrated to the likes of the Conference Centre Dublin or Citywest.
Industry players familiar with the property say it desperately needs a refurbishment, which would cost between €15 million and €20 million. Hefty sums.
Having made a handsome profit from its sale in 2007, might the Doyles be tempted to buy it back?
The Doyle Collection still holds the rights to the title but, with a refinancing due on its borrowings, buying back the Burlo is probably not high on its list of priorities.
The Burlo is believed to be doing about €5 million a year in Ebitda (earnings before interest, tax, depreciation and amortisation).
The price-tag suggests a multiple of up to 15 times Ebitda. Industry-watchers say 10-12 times would be more realistic.
The Morrison and Four Seasons hotels in Dublin all attracted overseas backers in recent transactions. The Burlo looks likely to go the same way.
Fyffes raises earning guidance 11%
For the second time this year, Fyffes has upgraded its guidance, raising its full-year earnings guidance by 11 per cent yesterday on the back of strong revenue and profit growth.
Analysts have taken notice. Most Dublin brokers yesterday drew attention to their belief that the stock is undervalued – Fyffes closed up 6.5 per cent yesterday at €0.50, its highest point in more than two years.
The reasons behind Fyffes’s low valuation in recent times are not difficult to fathom.
The decision to split the group into three separate companies – Fyffes, Total Produce and Balmoral, formerly Blackrock, left some scratching their heads. Property company Balmoral in particular has had a disastrous performance. Fyffes wrote down the value of its investment in Balmoral by €11.9 million last year. In terms of profits, Fyffes is also a traditionally volatile company. Nonetheless, the fruit importer appears to be on an upwards trajectory. Revenue grew by 20 per cent in the first half of 2012 to €550 million, while Ebita (earnings before interest, tax and amortisation) increased by an impressive 31 per cent year on year. While some of the revenue growth was down to positive currency translation, the company achieved solid volume growth, with its banana business gaining market share, despite higher fuel costs. Fyffes is now the number-one melon importer in the US, and has eclipsed Chiquita as the largest banana importer in Europe, according to the company.
It has also focused on cost efficiencies, improving margins in the process. Another contributor to Fyffes’s strong performance has been high prices, with the company successfully offsetting rising costs with higher pricing. With the global trend moving towards dearer food, the firm is likely to be supported by benign food pricing in the months ahead.
Quote of the day
You have a right to privacy, but you don’t have a right to be president. If Bain and Mr Romney saved themselves tens of millions of dollars in taxes, then you would expect that to be examined.” – Private equity executive on news of investigation by New York AG
TODAY
Exchequer returns for the first eight months of the year are published by the Department of Finance
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