Firm may pay €750,000 for €300m site

South Wharf could manage to buy a €300 million site in Dublin's docklands for just €750,000 if land authorities accept that it has a right to purchase the State property under a legal loophole.

In a statement issued to the Stock Exchange yesterday morning, South Wharf confirmed weekend reports that it had applied to Dublin Port Company for permission to buy the 25-acre site it occupies at Ringsend in Dublin.

"South Wharf is advised that, under the relevant provisions of the Landlord and Tenant Acts, its subsidiary is entitled to purchase the fee simple from the Dublin Port Company," the statement read.

"This matter is currently the subject of litigation," the company added.

Shares in South Wharf rose by more than 50 per cent after the statement was released. They closed at €3.50, up €1.20 on the day, as investors considered the value that ownership of the site could hold for the firm's shareholders.

South Wharf is trying to purchase the former Irish Glass Bottle Company site under a specific legal loophole relating to State-owned lands. The provision covers situations where State-owned bodies are leasing lands to other entities under particular circumstances.

It allows a company that holds a lease and creates a sub-lease to acquire the right to buy the property outright, or purchase its "fee simple" for a multiple of 15 years' annual rent.

In South Wharf's case, this annual rent is thought to amount to just €50,000 under a lease dating back to the 1960s. This implies a purchase price of less than €1 million.

The loophole under which South Wharf has made its claim was closed at the end of June. The firm made its move prior to that date but after May 19th.

The company is thought to have become aware of the provision in May when the Minister for Enterprise, Trade and Employment, on May 19th, brought an amendment to the Landlord and Tenant (Ground Rents) Act in relation to IDA Ireland, Shannon Development and Udarás na Gaeltachta.

This move followed a successful attempt by an IDA client company to acquire State lands at Clonshaugh in Dublin.

The loophole was not closed in respect of Dublin Port Company until June 28th.

A spokesman for Dublin Port Company declined to comment on the matter yesterday, saying it was the subject of legal proceedings.

The port company is thought to have lodged two plenary summonses with the High Court towards the end of June that were aimed at evicting South Wharf from the property.

The company has meanwhile continued to occupy the site, which is on reclaimed land, and is applying to the County Registrar to acquire the fee simple. Its lease has about 50 years left to run.

The application is being opposed by Dublin Port Company, which is believed to be trying to overturn the structure South Wharf has put in place to launch its claim.

South Warf, however, is said to be determined to assert what it believes is its legal right.

The spat is not the first to have developed between Dublin Port Company and South Wharf in recent times.

At the start of this year, South Warf, which was spun out of Ardagh, lost a High Court case that stemmed from Dublin Port Company's refusal to allow it to change the use of its site from manufacturing and warehousing.

An about-face came in April when South Wharf said it wanted to join with Dublin Port Company to redevelop the property, which had been rezoned to allow commercial, residential and retail use.

At that stage, South Wharf said it was drawing up a master plan for redevelopment. Some in the market believe the company could be using its latest move as leverage in its attempts to change the use of the property.