DIFFICULT TRADING conditions have reduced this year’s forecast earnings at Quinn Group, forcing a reworking of the original restructuring of the €1.3 billion in debts to the banks and bondholders last March. It was that deal that led to Anglo Irish Bank and the group’s lenders taking ownership of the business from Sean Quinn.
At the time of the restructuring, the group was expected to make earnings before interest, taxes, depreciation and amortisation (Ebitda) of just over €100 million this year.
Worse-than-expected trading has reduced this to €80 million, leading Anglo and the group’s banks and bondholders to revisit the terms of the original restructuring deal.
Under that deal, Anglo, owed €2.9 billion by the Quinn family, took 75 per cent ownership of the Quinn Group, which is involved in the manufacturing of cement, glass and building products. The remaining 25 per cent was taken by the banks and bondholders who are owed €1.3 billion.
This debt was split – €760 million was left with a new manufacturing company and the remaining €511 million was put into a revised loan facility with an initial repayment to be made from the sale of the family’s jet, helicopter and three of their hotels.
To prevent a breach of covenants under the restructured deal, Anglo and the group’s banks and bondholders met on Thursday to re-open negotiations with the aim of moving more of the debt from the manufacturing company – which, it was deemed, should only shoulder debt equal to seven times’ Ebitda – to the revised facility.
A fresh refinancing of the debt has the potential to put Anglo’s equity in the group at risk and weaken the security on part of the debt owing to the banks and bondholders but still leaving it ranking ahead of Anglo’s shares as a type of preferred equity.
Anglo and the other lenders are due to meet again in London next week to discuss the revised terms of the refinancing deal ahead of a mid-October deadline to sign off on the takeover of Quinn Insurance by US insurer Liberty Mutual and Anglo.
The bank and Quinn Group have declined to comment. Quinn Group chief executive Paul O’Brien gave bondholders a five-year forecast for the group’s performance in a presentation on Thursday.
Trading conditions for the group were challenging in the face of difficult economic conditions, Mr O’Brien told them.
