THE LENDERS to the Quinn Group will receive interest payments of about €100 million a year under the restructuring deal where they have taken control of the business from Seán Quinn with Anglo Irish Bank.
Banks and bondholders are owed €1.28 billion by the group, while State-owned Anglo is owed €2.88 billion by Quinn and his family.
About €760 million of the lenders’ debts are being moved to the group’s manufacturing businesses, on which they will receive 8 per cent interest payments amounting to about €60 million a year on a new five-year loan with a full and final repayment of all outstanding loans at the end of the term.
On the remaining €511 million of loans, which will remain with the overall Quinn Group operating company, the banks and bondholders will receive interest payments amounting to 7.5 per cent or about €40 million a year, or 5 per cent a year if certain cash flow targets are met.
Anglo is taking an economic interest of 75 per cent in the group but 25.1 per cent of the voting rights, while the lenders are taking the remaining 25 per cent interest and 74.9 per cent of the voting rights. This gives the banks and bondholders effective control over the business but Anglo the lion’s share of any future profits.
To cover the €511 million in loans to the group’s lenders, Quinn Insurance is providing a loan note for €121 million that will be repaid from the sale of three of the group’s hotels – the Sheraton Krakow, the Hilton in Sofia and the Crowne Plaza in Cambridge. The banks and bondholders will also receive cash of €80 million from the insurer to help repay the €511 million debt.
The Quinn family in a statement claimed the group’s international banks and bondholders would “benefit from the depletion of the reserves of Quinn Insurance by over €200 million” and that this would “increase the likelihood of a call on the Insurance Compensation Fund and will have an impact on Irish consumers”.
The proceeds from the sale of Quinn Healthcare, which Liberty has said it is not interested in, will also be used to repay the €511 million debt. Irish Life is interested in the health insurance business.
As part of the restructuring, the group’s lenders are dropping guarantees worth €464 million on subsidiaries of the insurer, which led to the appointment of administrators to the company last year.
Under their proposal to take over Quinn Insurance, Anglo and Liberty will inject capital into a new company which will not carry any losses from the UK arm.
As part of the restructuring of the Quinn Group, any redundancy programme involving more than 10 per cent of the workforce of any division in the State or Northern Ireland must have prior approval of Anglo and at least 50 per cent of the group’s lenders.
Anglo will receive a fee of €7.5 million on the closing of the transaction, while the group’s creditors will be entitled to a payment amount to 1 per cent of their debt, or about €13 million in August 2013. The transaction also involves the release of “known and unknown claims against Anglo”.
