Oaktree offers €25m to banks in bid for McInerney

THE INVESTOR bidding to buy house builder McInerney out of examinership is offering its banks €25 million in final settlement of their €113 million debt as part of a €48 million rescue plan for the group.

McInerney owes €113 million to a syndicate of three banks, State-owned Anglo Irish, Bank of Ireland and Belgian-controlled KBC.

The group’s Irish business has been under High Court protection since September to allow examiner Bill O’Riordan to put together a rescue plan for its operations here.

It emerged yesterday that Oaktree Capital, the US-based private equity player that has been bidding to buy McInerney, is offering the bank syndicate €25 million cash in full and final settlement of the debt.

It originally offered the banks €60 million when talks on its bid began last August. This would have involved the banks, which are secured creditors, accepting repayments of the lower amount over several years, and providing some working capital.

The banks opposed the original motion to have McInerney placed in examinership, claiming that they would get up to €90 million under a “long-term receivership” that they were proposing.

The new offer, based on a re-evaluation of McInerney’s land banks, its main assets, is for cash and would buy out the banks should they accept it. The offer forms part of Mr O’Riordan’s rescue plan, or scheme of arrangement, which involves Oaktree putting up a total of €48 million.

Of this, creditors other than the banks will be paid €2 million. Unsecured creditors will get 7 per cent of their debts and preferential creditors will get 18 per cent.

There will be €5 million in working capital available and with a further €15 million put aside for future investment.

The scheme would ensure the rescue of 109 jobs directly and a further 200 indirectly in subcontractors.

To pave the way for the deal, Mr O’Riordan asked the High Court to lift its protection from McInerney’s publicly-quoted holding company and two other subsidiaries, and appoint him as liquidator of these companies. The plc delisted last week.

Creditors will meet tomorrow to vote on the scheme. Once one class whose rights are affected support the plan, it can go the High Court for approval.

The hearing is likely to be shortly before before Christmas and the parties are due to ask Mr Justice Frank Clarke for dates next week.

Any creditor opposed to the plan, including the banks, will have to demonstrate that they would fare better in a liquidation or receivership.

The banks’ claim that they would earn €90 million of the total due over time has been criticised as the institutions have not produced their own figures to support this.

McInerney’s assets consist largely of greenfield sites with planning permission for building. In some cases, this permission will lapse if work on developing the sites does not start within a few years.