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Last Updated:
Feb 25, 2010 - 2:16:40 AM |
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| The site of the former Irish Glass Bottle plant, Ringsend, Dublin (within red contours). It was purchased at the peak of the boom in 2006 for €412 million, by a consortium led by developer Bernard McNamara. In the same year, Ireland's biggest bank AIB, sold part of its Dublin headquarters, the Bank Centre, to developer Seán Dunne. |
The former manufacturing plant site of the Irish Glass Bottle Company, was sold for €412 million in 2006, the craziest year of the Irish property bubble. An Irish State agency was among the purchasers while the owner was the Dublin Port Company, a private limited company owned by the State. Now as legal proceedings are underway in the Commercial Court, it's unclear at present what the ultimate exposure of the taxpayer will be for a property currently valued at €60 million.
In the 1970s, the Irish Glass Bottle Company and its former subsidiary Waterford Glass, had a combined payroll of almost 5,000 - - similar to US chip giant Intel, currently Ireland's largest industrial employer.
By 2002, the glass plant was owned by Ardagh Glass, which was headed by former tax accountant Paul Coulson, and was shut after a 17-week strike, with the loss of 375 jobs.
Irish Glass Bottle Company dated from 1925 and recommenced manufacturing in 1932, under the ownership of Joseph McGrath and Joseph Griffin and the 24-acre site adjacent to Strand Road, in Ringsend, South Dublin, comprises land reclaimed from the sea and part of it had been used as a waste tip-head by Dublin Corporation.
The site was leased to Irish Glass Bottle by the Dublin Port Company.
In 2005, the site was owned by South Wharf Plc, under the control of Paul Coulson, and it lost a High Court application to force the Dublin Port Company to agree to a change of use from manufacturing and warehousing.
In May 2005, the Minister for Enterprise, Trade and Employment, Míchéal Martin, proposed an emergency amendment of the Landlord and Tenant (Ground Rents) Act to the Dáil, that closed off a loophole in respect of IDA Ireland, Shannon Development and Udarás na Gaeltachta properties that were leased to client companies.
The loophole had been left in place in so far as it might apply to other State agencies that were leasing out land under certain terms. Other Departments were advised to examine the situation.
Martin said a legitimate scheme could be devised whereby sub-leases created by lessees could establish an entitlement for the sub-lessee to acquire the fee simple thus extinguishing restrictive covenants in the head lease. This anomalous situation, whereby a sub-lessee can extinguish an agreement between the lessee and a third party, was noted by the Law Reform Commission in 1989 and again in 1992.
As Finfacts has noted ad nauseam, change in the Irish system, happens very, very slowly, if at all.
South Wharf, apparently alerted to the news of the loophole, by Martin's amendment, offered to buy the fee simple of the Ringsend site for 5% of the commercial value.
Dublin Port Company subsequently agreed to jointly sell the site with South Wharf, on a 33.6%/66.4% split of the proceeds of the 2006 tender price of €411,987,000, from a consortium comprising developer Bernard McNamara (41%), property financier Derek Quinlan (33%) and the State agency, Dublin Docks Development Authority (DDDA) (26%).
Jones Lang LaSalle and Hamilton Osborne King acted as property agents during the sale of the site, while Davy Corporate Finance advised South Wharf on the transaction.
Davy then organised a group of its clients to fund McNamara, while State agency, the DDDA, paid €107 million for its stake.
State-owned Dublin Port Company received €138 million and South Wharf made €274 million with Paul Coulson personally earning about €30 million from the deal.
The DDDA, which included Anglo Irish Bank directors, Seán Fitzpatrick and Lar Bradshaw
, on its board, when it agreed to take the 26% stake in the consortium, has written down the value of its stake by €87.5 million.
Anglo Irish Bank and AIB are owed almost €300 million for funding the purchase and it's unclear what the exposure of the DDDA, is in respect of the liabilities.
Bernard McNamara is resisting a demand by Davy investors for a return of €95.8 million.
Last week, he had a case entered in the Commercial Court, where he is seeking to have the DDDA indemnify him against a potential claim from Anglo, as well as the Davy investors.
McNamara’s potential exposure is said to exceed €140 million.
The net "profit" of €21 million made initially between the transactions of the two State owned enterprises, has been more than gobbled up by the cost of the Environmental Protection Agency (EPA) in making the former dump, safe.
And if the foregoing wasn't enough of a litany of shame, NAMA, the State "bad bank," is likely to end up holding a toxic asset, that the State's EPA declared toxic-free last month.
South Wharf made €274 million from a lease, while the freeholder - - the taxpayer -- could be in hock for hundreds of millions of euros.
Update: On Dec 18, 2009, Mr Justice Peter Kelly, the head of the Commercial Court ordered Bernard McNamara to pay €62.5m over guarantees he provided for loans for the Irish Glass Bottle site.
McNamara appealed the judgment to the Supreme Court.
Lawyers acting for McNamara warned of "a knock-on effect across the board" for other creditors if the largest ever personal guarantee judgment issued in Ireland was executed against him.
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