Rothwell and Moonduster set to bid for ICG

EAMONN ROTHWELL and the Philip Lynch-led Moonduster consortium are preparing to table a joint bid of up to €15 a share for listed ferry operator Irish Con-tinental Group (ICG).

This would represent a negligible premium to ICG’s current share price of about €14.50 and is unlikely to be recommended to shareholders by the company’s board of directors.

This would leave the bid dependent on the support of property developer Liam Carroll, who owns 29.24 per cent of the business and is its biggest shareholder.

Mr Carroll is believed to have borrowed €200 million from AIB to build his stake in ICG two years ago at an average of more than €20 a share.

It is not clear if Mr Carroll would be willing to take a large hit on his investment in ICG.

ICG’s board has set a deadline of close of business today for the consortium to submit its offer, but Mr Rothwell and Moonduster, who own 41 per cent of ICG between them, are likely to seek an extension.

Moonduster, which comprises Mr Lynch’s One51 investment group and the Cork-based Doyle shipping company, first indicated its intention to make a bid last October.

It is understood that a bid in the range of €11-€15 is being considered by the consortium, with sources indicating that it was likely to be at the upper end of this range.

They have held lengthy talks with a consortium of banks about funding for the deal, which has proved difficult given the flux in global credit markets.

AIB and Bank of Ireland are believed to have agreed in principle to back the takeover, but the consortium is also thought to be talking to Bank of Scotland (Ireland) and another international bank.

A €15 a share bid would value ICG at €367.5 million, a premium of just 3.4 per cent on its current value. ICG’s board, which is being advised by NCB Stockbrokers, is thought to want a bid of closer to €20 a share.

ICG was the subject of a takeover battle in 2007 between Mr Rothwell’s Aella consortium and Moonduster, which resulted in a stalemate. Aella had a bid of €24 a share rejected at the time by shareholders.

This figure factored in substantial value attaching to ICG’s 33- acre site in Dublin Port, which is held on a long lease and could be redeveloped if the port were moved. Since then, however, Irish property values have collapsed.

ICG’s board will argue that it is a highly cash generative business and has significantly reduced its net debt in recent years. ICG’s debt fell to €48.7 million in 2008 from €84.5 million a year earlier and could be wiped out in 2009.

The consortium is likely to highlight the fact that ICG’s passenger, car and freight volumes declined last year as the economy slumped. Its revenue fell by 3.6 per cent to €342.9 million although its operating profit rose by 4.5 per cent to €41.8.million.

It is also likely to highlight the probability of ICG’s share price declining sharply in the absence of an offer, as has happened with Aer Lingus, which also has a restricted shareholder base.