Irish property developer Ballymore International is selling off its overseas assets in a bid to settle its €252 million senior debt with the National Asset Management Agency (Nama).
In a review attached to the latest set of accounts of Ballymore International Development Ltd (BIDL), whose shareholders include Monaco-based veteran businessman Michael Smurfit, company chairman Seán Mulryan said the asset disposal programme is expected to conclude by May 2016 and result in an "adverse" outcome for investors.
Mr Mulryan said the directors’ “best estimate” was that it was “unlikely” the asset sales would “realise an excess of value greater than Nama debt” owed by BIDL when the wind-down is completed.
In addition to the Nama debt, BIDL owes €77 million to Ballymore Group, a related company, through a "docket loan" and €8 million by way of profit participating loan notes.
Both of these debts are subordinated to the Nama loans.
‘Hugely disappointing’
“Regrettably, the outlook for the group is adverse,” Mr Mulryan said “With each of the group’s property assets targeted for sale over the coming 12 months and a significant debt overhang on its balance sheet, the group is unlikely to be capable of realising value for stakeholders below Nama.
“This expected outcome is hugely disappointing and could not have been envisaged when the BIDL Group was established in 2007.”
Mr Mulryan said the asset disposals included the sale of Eurovea Phase 1 in Bratislava in 2014 and the Kudamm Karree in Berlin this year, which was sold for €155 million.
“These represented the group’s largest assets and the sale of the remaining group properties is expected over the coming 12 months,” Mr Mulryan added in his review, which was dated May 2015.
He said Nama would seek to recover any potential future excess through the Ballymore Group and it was therefore “unlikely” that there would be any residual value for equity holders or other stakeholders based on current market values.
The accounts show that BIDL removed total debts of about €571 million from its balance sheet with the sale of Eurovea trade centre in Slovakia. This included investors receiving just 10 per cent of the value of loan notes issued to help finance the development.
In addition, the accounts state that the carrying value of the assets held for sale was €261 million at the end of 2014, down from €608 million a year earlier.
The company actually made a profit last year of €30 million, which compared with a loss of €121 million in 2013.
This was largely due to a €223 million profit on the disposal of subsidiaries connected with Eurovea.
BIDL’s turnover halved during the year to €27.8 million, while it posted a pre-tax profit of €41.5 million.
Wind-up provision
A wind-up provision of €11.6 million left the group with a final profit of just under €30 million.
According to documents lodged with the Companies Office, Mr Mulryan owns 75 per cent of the shares. Clients of Davy hold 17.34 per cent between them through nominee accounts, with clients of State Street holding 3 per cent and Mr Smurfit owning 1.5 per cent.
No comment was available last night from either Ballymore International or Nama.
