TAXPAYERS MAY have to provide money to a company backed by high-profile developers John Ronan and Richard Barrett through the State’s toxic loans agency Nama.
Property investment firm Real Estate Opportunities (REO), whose biggest shareholder is the Mr Ronan and Mr Barrett-controlled Treasury Holdings, said yesterday it owes Nama €997 million after the agency took over loans given to the company by AIB, Anglo Irish, Bank of Ireland and Irish Nationwide.
REO owes €2 billion in total to its banks, while its properties in Ireland and Britain are valued at €1.3 billion. Its accounts state it is not in a position to repay €450 million of debt that falls due next May. It has hired consultants to help restructure this.
The company has asked Nama to provide it with working capital – the cash it needs to fund operations. A business plan it has submitted to the agency assumes this will be provided.
Nama already looks set to waive a key term of a €100 million-plus loan originally given by Bank of Ireland to REO to help fund its purchase of Battersea power station in London in 2006 for €600 million.
One of the conditions of the loan was that REO’s overall value remained above a certain level. As property values slumped over the last two years, it slipped below the level required, which should have triggered the debt’s repayment. According to REO, Nama and Bank of Scotland, which was also involved in the deal, have agreed to waive this, and to extend the repayment date to August next year.
Nama has said in the past it will provide working capital to creditors where this will aid them in repaying money they owe the State. A spokesman for Nama said yesterday that it does not comment on individual cases and added that the business plans submitted to it so far by developers are still being reviewed.
Nama’s priority is to recover money owed the State by developers. It can order them to sell properties and, in worst-case scenarios, wind up their companies or appoint receivers.
Along with Battersea, REO owns a number of valuable properties in Ireland. It is behind the proposed Ballymun shopping centre development – now known as Spring Cross – which will cost €400 million to build.
It owns Central Park, in Sandyford, Co Dublin, one of the country’s biggest commercial properties, for which Vodafone is paying a €7 million annual rent.
Battersea is likely to cost £5.5 billion to develop. The company intends bringing in a partner to help fund this by the end of the year. Mr Ronan and Mr Barrett are two of the country’s best-known property developers. They began building up their business in the late 1980s. Nama is one of Treasury Holdings’ tenants – the agency occupies space in the Treasury Building on Dublin’s Grand Canal Street.
Mr Ronan announced in March that he was taking a break from his business activities for a few months because of media coverage of aspects of his personal life. He said this had “the potential to distract attention” from his business interests.
