McInerney closer to agreeing new debt terms

TROUBLED HOUSE-BUILDER McInerney has moved a step closer to agreeing new terms for its €242 million debt, but the company said yesterday it was still depending on the support of its banks to stay in business.

The group announced it was looking at the possibility of raising fresh capital as part of a strategic review being carried out by stockbrokers Goldman Sachs.

It warned that such a move could dilute the interests of existing shareholders.

McInerney reduced pre-tax losses on its operations by almost half in 2009 to €25 million from €47 million the previous year.

However, total losses, which included a write-off of €157 million against the value of its property holdings, came to €193 million, an improvement of just 6 per cent on the €206 million it recorded last year.

Revenue, which comes mainly from the sale of new houses in Ireland and Britain, fell by 50 per cent to €149 million last year from €300 million in 2008, as the recession continued to bite in both countries.

The company said it continued to depend on the support of its banks to stay in business. McInerney owes them €242 million and has been attempting to renegotiate the terms of these loans since the middle of last year.

McInerney confirmed it remained in breach of two key terms on which the loans were given. One was that it would meet certain sales targets, and the other was that it would maintain a certain level of net worth relative to its liabilities. It has broken both these conditions as sales and property values have collapsed in its two main markets.

It wrote €82.5 million off the value of its assets in 2008. By the autumn of last year, the value of its Irish land bank had halved over the previous two years, while its British assets have taken a 40 per cent haircut.

In a statement, McInerney’s chairman Ned Sullivan said the company had received credit approval for revised banking terms for its Irish house-building business, and had extended the repayment date for these loans, worth a total of €111 million, to March 31st, 2011.

“The group’s UK revolving credit facility has a maturity date of March 31st, 2010, and this has now been extended by one month,” Mr Sullivan added. It has interim funding measures in place.

Along with the possibility of raising new capital, Goldman Sachs is looking at the possibility of restructuring the group’s financing arrangements.

Mr Sullivan said yesterday the company would update shareholders at its agm, which is scheduled for May 12th.

McINERNEY HOLDINGS RESULTS

Turnover: €149.3 million (-50%)

Loss before tax: €193 million (+6%)

Loss per share: 95.15 cents (-1%)

Dividend: 0 (no change)