Updated: 22/02/12 : 05:56:53
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Receivership could collapse Sligo project - court claim

TREASURY HOLDINGS has claimed in the High Court that a receivership appointed by the National Asset Management Agency (NAMA) "could collapse the Sligo town centre project."

The project referred to is the site of the 80 million euro town centre development by Treasury subsidiary Callside, centred on Debenhams proposed  46,000 square feet plan over three storeys, due to to open by Christmas 2013.

Treasury seeks leave in the High Court to bring a judicial review to NAMA's decision to appoint a receiver over a series of properties in its portfolio. The hearing got under way shortly after 11am yesterday (Tuesday) before Ms Justice Mary Finlay Geoghegan. It is anticipated it will take four days. NAMA is due to give evidence later in the week.

Yesterday, Treasury claimed NAMA had made a “dramatic” decision last December to proceed with appointing receivers over assets of various Treasury Holdings companies without telling the developer which was then in advanced negotiations with investors.

Crucial Decision

NAMA’s “crucial” decision of December 8th to proceed with appointing receivers was not made known to it until about a month later, even though both sides were in contact throughout December, Treasury's Senior Counsel Michael Cush told the Court.

Treasury further claims the proposed receiverships could threaten direct jobs here, could result in no further development of its Spencer Dock site in Dublin, could close the Ritz-Carlton Hotel in Co Wicklow, could lead to the closure of the company which owns Dublin’s National Convention Centre and, the Court was informed, could collapse the Sligo Town Centre project.

NAMA acquired Treasury debts with a face value of some €1.5 billion in 2010 but Treasury claims, while accepting it is “balance sheet insolvent”, it could have continued to operate had terms been agreed with NAMA. It could have advanced plans to achieve a “once-off sale” to investors of practically all its loans, the Court was informed. Details were offered of investors who had offered a “generous” price of €622 million for its loan portfolio.

What was described as a “more complex” bid separately offered “a potential total return” to NAMA and the Spencer Dock banking syndicate of some €600 million.

Both those proposals required “significant” vendor financing by NAMA, Treasury said. The offers were comparable with a €805 million offer from US real estate firm, CIM, approved by the Nama board in 2010 (which ultimately did not proceed) when allowing for the fact Battersea Power Station and other loans were not part of the portfolio being sold, Treasury said.

The “major benefits” to NAMA and the State if such a commercial deal was concluded would “far outweigh” the scenario offered by a group receivership. Treasury’s goal was to exit Nama via such a once-off sale and it fears the agency’s actions in moving to appoint receivers will result in a piecemeal sale and the break-up of its “valuable portfolio”, Mr Cush, Senior Counsel for Treasury, said.

Treasury contends the December 8th decision, and a decision in January to call in the loans and formally appoint receivers over various assets, are invalid. It claims the decision was made without notice to the developer and without giving it an opportunity to be heard, in breach of its right to fair procedures. Treasury Holdings has also alleged “bad faith” on the part of NAMA concerning the timing of the receivership decision.

The proceedings by Treasury and 22 related companies arose after NAMA indicated it intended to appoint receivers to assets of the companies in Ireland, including the PricewaterhouseCoopers’ office in Spencer Dock and the Central Park office complex near Leopardstown.

Treasury claims NAMA's actions could have a domino effect within the group, threatening its survival.

The State, KBC Bank, Irish Bank Resolution Corporation (formerly Anglo, as agent for a syndicate of banks which made loans to Treasury) and the joint receivers – Luke Charlton and David Hughes – are notice parties to the case.

NAMA strongly disputes Treasury’s claims, the Court heard, and contends it had “engaged rigorously” with Treasury since 2010 but its proposals on the way forward were not commercially acceptable.

The hearing continues with day two today (Wednesday).