Private equity firm paid €3.7m by Clerys in run-up to sale

Gordon Brothers, the Boston private equity firm that sold Clerys hours before it was liquidated last summer, were paid €3.65 million from the department store's coffers in the run-up to the sale.

The largely unexplained payment, which is referred to only as “interest and fees” in Clerys company documents covering the period of the €29 million sale, was almost six times larger than a corresponding payment in the previous year.

The payment is revealed in accounts filed for OCS Investment Holdings, the parent group of Clerys that ultimately owned the building on O’Connell Street, Dublin and, in a separate entity, the operating company that was later placed into liquidation. Clerys closed in June of last year, with the loss of more than 450 employee and concession holder jobs.

Gordon Brothers and Malcom MacAulay, the chief operating officer of the firm in Europe and a former Clerys director, did not respond to questions yesterday about the circumstances surrounding the fee.

The queries related to the services Gordon Brothers carried out for Clerys to earn such a large fee, why it was so much higher than previous years, and whether some of the money could have been left on Clerys’ balance sheet to help pay staff and creditors. The State was left to pick up the tab for redundancy payments to Clerys’ staff.

Natrium, the joint venture between developer Deirdre Foley and London hedge fund Cheyne Capital that now owns Clerys, sealed the deal on June 12th, 2015 by buying all of the shares of OCS Investment Holdings for €29 million.

The proceeds were split between Gordon Brothers and Bank of Ireland, which took the bulk of the money to repay loans secured on the building.

The latest OCS Investment Holdings accounts show it owed Gordon Brothers €6.5 million, which was repaid in full from the Clerys proceeds. It was not due until September 2016.

A UK Gordon Brothers entity, GB Europe Management Services was paid the €3.65 million. The corresponding “interest and fees” payment the previous year was €690,000, and about €995,000 the year before that.