McInerney to stop funding insolvent Spanish subsidiary

HOUSEBUILDER McInerney plans to stop funding an insolvent Spanish subsidiary in a reorganisation that will see it pull back to its core Irish and British markets.

McInerney announced yesterday that it does not intend to invest further cash in its Spanish apartment developer, Alanda Homes.

As a result, Alanda has decided to ask the Spanish courts to appoint an administrator to the company, who will take over control of the business from the Irish group.

McInerney said yesterday that it would not be possible to predict the outcome of the adminstratorship, but added that over time, there was a possibility that Alanda’s creditors would be repaid from the sale of apartments.

Administratorship is a method of dealing with insolvencies under Spanish law. It normally takes a long period to work through the process.

The group’s statement said yesterday that Alanda Homes’s assets were worth €4.5 million on December 31st last year. The debts of the overall Spanish business, which includes two profitable divisions, are estimated at less than €10 million.

The news comes three weeks after McInerney revealed that former chief executive Barry O’Connor expressed interest in bidding for all three of the group’s Spanish interests.

Mr O’Connor would not comment yesterday on the status of his bid. He stepped down from the chief executive’s job early last month to allow him to explore the possibility of bidding for the Spanish operations. His colleague Enda Cunningham took over the job.

McInerney is keeping control of Alanda Club Marbella Ltd, a tourism and leisure business that is profitable, and development land at Sotogrande.

If Mr O’Connor were to bid for the three businesses, he would have to deal with the administrator of Alanda Homes. He would still have to talk to his old employer about any offer he would be prepared to make for the other two companies.

McInerney recently appointed Goldman Sachs to advise on a restructuring of the group which could possibly involve raising new capital.

It has been renegotiating the terms of its loans with the banks for several months.

McInerney’s main business is building houses and selling them mainly to first-time buyers, while its core markets are Ireland and Britain.

While the housing market has virtually collapsed in both countries since 2008, the group believes the market is likely to recover faster here than in Spain.

Sources said yesterday that the company is no longer willing to pump any more money into the loss-making Spanish apartment business.

McInerney’s own statement said yesterday that its decision to stop feeding cash to Alanda was part of its plan to “to concentrate all available resources on its core businesses of home building in UK and Ireland”.