PHILIP LYNCH's One51 investment group last year offered the UK-based Arkaga fund the opportunity to invest in TS Capital, a related entity that held One51's shareholding in Irish Continental Group (ICG), writes CIARÁN HANCOCK, Business Affairs Correspondent.
It is understood that the offer was made in July 2007 by Mr Lynch to Arkaga director Gerard Walsh. At the time, both parties were shareholders in ICG and One51 was part of the Moonduster consortium - along with the Cork-based Doyle shipping company - that had tabled an offer for the ferry group.
This would appear to suggest a link between One51/Moonduster and Arkaga at a time when ICG was the subject of a takeover battle between Mr Lynch and a management-led bid by the ferry company's managing director, Eamonn Rothwell.
It is understood that documents relating to Mr Lynch's investment offer to Arkaga have been submitted to the Takeover Panel.
This is thought to form part of the Takeover Panel's enquiry into allegations that Moonduster and Arkaga were concert parties during the battle for ICG last year, something that was never revealed to the stock market.
At the time of the offer to invest in TS Capital in July 2007, Moonduster owned 20.3 per cent of ICG and had submitted a bid for the ferry company.
Arkaga, meanwhile, held 4.8 per cent of ICG's stock.
Under rule 20 of the takeover code, Moonduster, as an offerer for ICG, would have been required to inform the Takeover Panel of any discussions with another shareholder in the ferry group. It is not clear if this disclosure was made.
When contacted by The Irish Times, Moonduster said it had no comment to make on this matter.
A spokesman added: "Moonduster has made a very detailed response to the Takeover Panel about the false and misleading [ concert party] allegations that have been made."
Moonduster subsequently increased its stake in ICG to 25 per cent, while Arkaga ended up owning 5.26 per cent.
It is not clear if Arkaga took up the offer to invest in TS Capital. There are no documents filed with the Companies Registration Office here to suggest that it did.
It is understood that Mr Lynch outlined in correspondence to Arkaga's Mr Walsh that TS Capital was formed to hold assets for One51, including its shareholding in ICG.
Mr Lynch said TS Capital's strategy was to expand its portfolio of assets; invest in property in Northern Ireland; and invest in public companies. He proposed that Arkaga invest in TS Capital through loan notes that would convert into a 24.99 per cent equity stake within two years, with an option to increase this level to 49 per cent over time.
In October, The Irish Times revealed that the Takeover Panel had received a letter from Kevin Beary, managing director of Dolmen Corporate Finance, alleging a link between Moonduster and Arkaga.
This was based on a conversation Mr Beary claimed he had earlier this year with David Hayes, a former director of Arkaga.
Mr Beary claims that Mr Hayes told him that Arkaga was involved in assisting the Moonduster consortium in its bid for ICG by buying shares through a vehicle called Buchanan Holdings.
Subsequently, The Irish Times revealed that Arkaga was seeking €11.8 million in compensation from One51/Moonduster for losses it incurred earlier this year selling its shares in ICG.
Arkaga claimed it acted as an agent for Moonduster in buying the ICG shares and had an agreement with Mr Lynch to be compensated for any losses incurred.
