Nama feared legal action would stop Elverys buyout

An interim examiner has been appointed by the High Court to the retailer Elverys Sports.

The National Asset Management Agency (Nama) yesterday petitioned for the appointment the court because it feared rival bidders would prevent a proposed buyout.

Nama feared either Lifestyle Sports, owned by the Stafford group, or Sports Direct, owned by UK billionaire Mike Ashley, would take legal action to prevent a so-called pre-pack receivership that had been arranged to sell the business to its management for €10 million.

A source close to the process said there had been “talk of injunctions” from would-be bidders.

Mr Ashley, who flew in to Dublin last weekend to try to secure a last-ditch deal for his group to buy Elverys, had complained to The Irish Times he felt "locked out" of the process.

“There was a real risk that the receiver might have been injuncted. Pre-pack receiverships depend upon a smooth and quick sale process. It was felt that, given what was happening, examinership would in fact be a cleaner, more transparent route,” said the source.

Simon Coyle of Mazars was appointed as interim examiner for the company, which employs 654 people in 56 stores. The agency is optimistic the company can survive, with two bidders vying to take it over, the High Court was told.

The plans to proceed with the management buyout unravelled in the last few days, after Mr Ashley said he was prepared to pay a 25 per cent premium.

The offer represented a significant improvement on the management offer, Nama indicated in its petition.

The petition also outlined a series of communications between Nama and Staunton Sports, owner of Elverys, and stated Nama had told the company, unless it received a satisfactory response to various matters by 10am yesterday, it was reserving all of its rights up to and including petitioning the court for an interim examiner.

Nama said its senior representatives met the company at 10.30am yesterday, when the company was told Nama would seek an interim examiner.

Nama requested the company’s support and was ultimately informed that it would support the petition.

Nama is the company's largest secured creditor, owed some €23 million, after acquiring its AIB loans in 2010 and 2011.

Rossa Fanning, for the agency, said it was optimistic the company could continue to trade as a going concern and had a very good prospect of surviving, with the two rival bidders.

Nama believed the underlying business was viable once the debt was dealt with and it would support the company financially once it secured court protection. Appointment of an interim examiner was urgent so as to assist in negotiations with suppliers to ensure continuity of supply, counsel added.

Nama was unable to produce an independent accountant’s report – a normal condition of an application for examinership – because of the exceptional circumstances prevailing in relation to the company and the urgent necessity to preserve its position, counsel argued.

Mr Justice McGovern appointed Mr Coyle, given the exceptional circumstances, and said an independent accountant’s report should be provided by February 11th, when the agency could seek an extension of the protection.