Today's Indo reports the sale price as 'well over €100m', but you're right insofar as we don't know the actual figures. However, given that the whole purpose of the prepack recievership (as confirmed by Andrew Street on the news yesterday) was to allow the business to walk away from the property debts, there is undoubtedly some degree of loss, let's call it €x million.There is no €200m loss for the taxpayer. Figures are been bandied about but apparently State supported banks were owed less than €275m. They apparently sold the business for €200m. This will go to the banks. Apparently Select Properties are left with some property interests that can be liquidated and the banks retain charges over so the losses are further reduced. The banks actually did the right thing by the taxpayer. (lending in the first place is a different argument)
Today's Indo reports the sale price as 'well over €100m', but you're right insofar as we don't know the actual figures. However, given that the whole purpose of the prepack recievership (as confirmed by Andrew Street on the news yesterday) was to allow the business to walk away from the property debts, there is undoubtedly some degree of loss, let's call it €x million.
Given the rushed prepack recievership, how can we have any confidence that €x million was the smallest possible loss to the State? Why did we allow Superquinn to negotiate a deal that should have been negotiated by the banks and their reciever?
So do you reckon that Musgraves are going to wait 23 years to get a return on their investment?
So Superquinn want a loan... and Superquinn, in it's own right, is applying. (Superquinn the company, a legal person in its own right, applies for a loan),.. of 400m say. Do the bank want security on this loan?, and what security do they take?
Hi Joe
There is no legal entity called "Superquinn".
There may have been a company called Superquinn Ltd owned by Fergal Quinn. He sold the property and the business and the trade name to a new company Select Retail Holdings Ltd
This company borrowed the money to buy the assets
So a receiver has been appointed to this company.
Brendan
At the time that I wrote, the reported investment by Musgraves was €200m for an annual before interest and tax of EUR8.5m (your figure), so the payback would have been 23+ years - which doesn't add up at all.No and I never said that. I am not sure what the point of your question is.
there is a viable long-term business here that will be well capable of paying these debts in the long term
It is indeed a simplistic calculation. Today's reports suggest that the debt was €275m, so obviously the cost of repayment would be less than your original estimates.I do not believe the EUR200m figure. Also, your 23 years calculation ignores a number of factors including the obvious potential for cost savings and the impact of receivership.
In any event, my point still stands. There was simply too much debt in the company. Even assuming Superquinn (a retailer that has seen its market share fall from 9% to 6%, operating at the ‘higher end’ of the market in difficult economic conditions) generates double the margin of Musgraves (a solid operator with more than 20% share) the company would just about be able to meet interest on its rumoured debt of EUR400m but not be able to reduce that burden in any meaningful way.
What is your basis for saying:
But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation relating to any business in this scenario, whereby the management team is looking at two bids;There is no way Superquinn did this deal without the banks involvement. The banks held charges over all the properties that were sold so there was no deal without the banks. I think as mentioned above, there is a certain amount of a balancing act between keeping losses at a minimum and destroying a business with 3000 employees.
But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation relating to any business in this scenario, whereby the management team is looking at two bids;
Bid A - €100m and keep management team in place
Bid B - €120m and replace existing management team
Which bid do you think will be nutured and supported to fruition by management?
You can look at hypothetical situations all day long and discuss the rights and wrongs of each but where do you pick up that SQ were calling the shots with the banks going along meekly? From what I've read over the past couple of days it was very much the banks in the driving seat. Again from today's Irish Times:But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation ...
You can look at hypothetical situations all day long and discuss the rights and wrongs of each but where do you pick up that SQ were calling the shots with the banks going along meekly? From what I've read over the past couple of days it was very much the banks in the driving seat.
Listen to what Andrew Street said on the 6-1 news last night. He gave a clear indication that Superquinn controlled the process.The owners were irrelevant to this. They don't benefit at all. The banks get all the proceeds and then more. Not sure what the management team of the superquinn business have to do with it. This was clearly driven by the banks wanting to protect their loans.
Why would the banks have lost control in an examinership? Surely the purpose of the examinership would be to explore all options to get the business back on track (i.e. repaying the existing debts).Again from today's Irish Times:
"The other option considered was examinership. This would have involved Superquinn getting High Court protection from its creditors, meaning the banks would have lost any real control over what happened next." The banks called in the receivers so they could maintain control and it was the receivers that decided that the bid should go ahead.
"In the end, its banks decided a receivership offered them the best way of separating the trading business from the property loans, and selling it with the aim of recovering some of their debt."
You don't believe that a deal was done in talks that 'opened late last week' surely? This deal has been in progress for a long, long time - long before the banks and KPMG got involved."Both Mr Street and Musgrave chief executive Chris Martin confirmed yesterday that preliminary talks between Musgrave, the banks and KPMG, which was about to be appointed receiver, opened late last week." So the talks were between Musgrave, the banks and the receiver - not a vested-interest SQ person in sight...
there is a viable long-term business here that will be well capable of paying these debts in the long term
No - that would be you...You don't believe that a deal was done in talks that 'opened late last week' surely?
Musgrave and other Irish and international buyers have been sniffing around SQ for months (years...) and I'm sure the main due diligence was done long before last week, undoubtedly facilitated and guided by SQ's management but when it came to the time to do an actual deal, the real interested parties (primarily the banks) had to become involved and negotiate a deal that they could live with.How can anyone stand up and say 'the price from Musgraves was the best value for money available' given that the deal was done in 8 hours.
I still do not understand how you came to the conclusion that
Could you elaborate a little on your thinking?
Quite the opposite - what I've been saying for two days now is that this deal was largely negotiated by SQ management long before the banks got involved. SQ management should not been negotiating a deal for the taxpayer.No - that would be you.
..
All true, but that doesn't answer the question of how you know it was the best deal available for the taxpayer.Musgrave and other Irish and international buyers have been sniffing around SQ for months (years...) and I'm sure the main due diligence was done long before last week, undoubtedly facilitated and guided by SQ's management but when it came to the time to do an actual deal, the real interested parties (primarily the banks) had to become involved and negotiate a deal that they could live with.
The taxpayer first, then the unsecured creditors.But it was the unsecured creditors who have been caught in the cross fire
I don't know that this was the best deal available for the taxpayer any more than you know it wasn't the best deal available for the taxpayer. With no evidence to the contrary, I think it is a reasonable assumption that the final negotiators, the banks and the receiver, would have been pushing for the deal that cleared the most debt (why would they do otherwise?) which is most likely the best deal available to the taxpayer.All true, but that doesn't answer the question of how you know it was the best deal available for the taxpayer.
The 'evidence to the contrary' is;I don't know that this was the best deal available for the taxpayer any more than you know it wasn't the best deal available for the taxpayer. With no evidence to the contrary, I think it is a reasonable assumption that the final negotiators, the banks and the receiver, would have been pushing for the deal that cleared the most debt (why would they do otherwise?) which is most likely the best deal available to the taxpayer.
Fair point, though perhaps the other potential buyers may well be outside the country.I haven't heard any other potential purchaser complaining to the press that they would have done a better deal
There's no evidence - these are just your opinions.The 'evidence to the contrary' is;
- the fact that the process was led and driven by SQ management
- the absence of any competition.