High noon for O’Reilly as AIB breaks ranks

Bernard Somers slipped into the back of Court No 1 in the commercial court at 2.25pm yesterday. The veteran accountant had fought a behind-the-scenes battle since 2010 to try to tackle the debt mountain of his client Sir Anthony O'Reilly.

Four years ago Somers had convinced all nine of the ex-billionaire’s banks to agree to a “stand-still arrangement” to allow him sell assets to pay off debts. O’Reilly owed his banks more than €300 million in 2008 but he had wealth too, built up over the decades.

There was little appetite among his bankers to pull him down, based on respect for his brilliant business career, but there was also pragmatism. A fire sale was in no one’s interests.

Assets cashed in

At first there was progress. O’Reilly sold his shares in his son Cameron’s business Landis + Gyr in May 2011 and used the proceeds to pay off some bank debts. He trickled art work on to the market, raising millions, and cashed in other assets. He still went on safari with friends such as the late South African president

Nelson Mandela

but the days of private jet use ended and O’Reilly scaled back his spending.

O'Reilly had stakes in three listed companies: Heinz, the bean company he once led; Providence Resources, an exploration company where son Tony jnr was chief executive; and Independent News & Media (INM), once also led by himself and, later, another son, Gavin.

In February 2013 O'Reilly raised tens of millions when Warren Buffett and 3G Capital bought Heinz for $23 billion. Buffett said one reason he bought Heinz was that he had become fascinated with the company after hearing O'Reilly tell tales about it at the home of ex-Washington Post publisher Katherine Graham.

Next should have been Providence Resources. In 2012 it was reported to have found €1.6 billion worth of oil off the coast of Cork. Foreign buyers were rumoured to be circling but none emerged and its shares fell back.

At INM, O’Reilly saw his shares – once worth hundreds of millions – decimated by the economic crash, the digital era and excessive borrowing. Add in shareholder Denis O’Brien and a corporate restructuring and O’Reilly’s stake fell in value hugely.

ACCBank told him to sell some of these shares, and the court heard yesterday that his remaining shares in the company are available for sale whenever his banks want.

Forbearance

Amid the juggling of nine banks and trying to sell assets,

AIB

began to break rank before last Christmas. It said yesterday it was tired of “forbearance” and was worried it would be pushed to the “back of the queue” if it didn’t move against O’Reilly.

It said his plans to repay his banks were “an expression of hope” and “very optimistic” when the reality, it claimed, was that he was “insolvent”.

O'Reilly's legal team raised an earlier possible deal in his defence. AIB dismissed this and said the chances of O'Reilly paying off his debts were as likely as "Mr Spock from Star Trek coming back to the table" in a movie.

Mr Justice Peter Kelly summarised the bank's position as: "Whatever rush occurs [for O'Reilly's remaining assets], if there is a rush, you will be in front?"

“Precisely so,” AIB replied. “It is a terribly simple point.”

The judge took until Friday at 11.30am to consider giving O’Reilly a stay of six months.

It is close to high noon for the State’s once most revered businessman. It has taken all his skills, and that of his trusty Somers, to save him thus far.