Property investor Paddy McKillen has refinanced his outstanding loans from the former Anglo Irish Bank with the financial support of Colony Capital, a California investment firm. The Belfast-born businessman's personal and company loans totalled €800 million to IBRC, the former Anglo.
His personal loans amounted to about €260 million and were secured in part on his stake in Coroin, a company that owns and manages three of London's most luxurious hotels: Claridge's, the Connaught and the Berkeley.
Face value
Mr McKillen is understood to have repaid his personal loans at par, or face value, in order to prevent his rivals the Barclay brothers seizing control of Coroin. The hotels in Coroin, collectively called the Maybourne Hotel Group, have been valued at €1.3 billion.
Mr McKillen said he would have been bankrupted by the owners of the Telegraph Media Group, who also tried to buy his loans, if he had not succeeded. “They were going to put my wife and family and kids out of our home. They didn’t care. They are totally ruthless,” Mr McKillen said.
“Our enemies had us written off but we had the ability to move within days and complete this deal,” he added.
"There was no shortage of interest from supporters, including some of the biggest funds in the world, but at the end of the day we went with [Colony Capital founder] Tom Barrack, who is an amazing man."
'Disappointed'
Mr McKillen said he was "disappointed" to have been forced into a race to refinance his own loans.
“We have been customers of Anglo Irish Bank for 30 odd years. To be thrown to the wolves in the way we were at the 11th hour was very wrong,” he said.
“A long-term funding agreement with Colony Capital puts the emergency liquidation of IBRC saga behind us. I am especially keen to bolster my ongoing efforts to take rightful control of Coroin and finish the development job to which I committed so many years ago.”
A spokesman for the interests of the Barclays said: “Nothing has changed with regards to Maybourne Hotel Group, except that instead of being charged to IBRC, Mr McKillen’s minority shareholding in Maybourne is now charged to Colony Capital. Colony or Mr McKillen will presumably decide who will represent their interest on the board of Maybourne for which they have one of the six board seats.”
Mr McKillen said yesterday's debt refinancing proved he was right to legally challenge an attempt by the National Asset Management Agency to take control of his loans.
“If ever there was vindication of that decision and the decision by the IBRC board and management to support me, this is it,” he said. “Nama was set up to take toxic loans off banks’ balance sheets, not good ones like mine,” he said.
Mr Barrack, a co-owner of the hotels prior to their sale to a consortium led by financier Derek Quinlan and Mr McKillen, said in a statement: "Joining forces with Paddy McKillen is a real-time example of how leverage-related resolutions need to proceed in Europe, not with foreclosures and value dissipation but through collaboration."
Barrack 'delighted'
Mr Barrack declined to respond to specific questions about whether he thought he could reconcile Coroin's warring shareholders. However, he said: "We are delighted to have the opportunity to be a financial conduit and partner in great world-class jewels that are under the stewardship of great, world-class jewellers such as Paddy McKillen and iconic and well-respected, world-class investors such as the Barclay Brothers. "
Meanwhile, IBRC liquidator KPMG said it sold four tranches of loans with a par value of €1.25 billion yesterday from portfolios known as Pebble and Stone.
Mr McKillen’s borrowings were called Pebble.
The closing date for bids on the remaining tranches of Project Stone is March 21st with final bids on Project Sand, mostly Irish Nationwide mortgages, due on March 14th.
