Liam Carroll's complex web

There has been much talk in recent months of Liam Carroll’s ‘complex web’ of companies, which all seem to owe each other money. Take one down, it has been said, and they all fall. But no one has yet tried to construct exactly what this web looks like. I think I’ll have a go. It is complex, so I am open to correction, but this is the best I can make out. I will place this in a tree structure to try and demonstrate the ultimate owners, and the various subsidiaries. In all cases I am referrign to Irish registered company in the table below.

Morston Investments Limited (Ultimate owner of all companies).

a) b) c) d) e) f) g) are all subsidiaries of Vantive Holdings.

1) Vantive Holdings
a) Danoval Limited
a i) Bulwark Limited
i) Jarmar Properties Limited
ii) Tallaght Town Centre Construction & Development Limited
iii) Bronzone Limited
b) Crossman Properties Limited
i) Crossman Northwall Limited
c) Danninger
c) i) Gainsco Limited
c) ii) Greencore Group Public Limited Company
c) iii) Greencore and its dozens of subsidiaries
i) North Quay Investments Limited
d) Riversmith Limited
i) Chinook Investments
e) Zoe Developments
e i) Fabrizia Developments
i) Barrow Echo
ii) Barrow Gamma
e ii) Eppo Developments
e i) Pepo Limited
e ii) Alexion Management
e iii) Chinook Investments
e iv) Netusa
e v) Oze Construction
f) Peytor Developments
f i) Parlez International Limited
ii) Bulwark Limited
ii) Royceton
g) Villeer Developments
g i) JP Ryan & Sons (Properties) Limited
g ii) Everill Developments Limited
ii) Zed Developments

This probably looks quite confusing. It might be better to put it into a spreadsheet.

A few of these names piqued my interest. I was curious about the unusually titled Barrow Echo and Barrow Gamma. Wherever I see number sequences, colour sequences or other logical name progressions in company names, I always take a closer look. But I will come back to that later.

Stewart responds to Cramer

S&P cuts Ireland outlook

Reuters:

Standard & Poor’s Ratings Services said today it revised its outlook on the Republic of Ireland to negative from stable, on what we view as mounting fiscal pressures and deterioration of key economic sectors. At the same time, the ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings were affirmed. Standard & Poor’s also affirmed its ‘AAA/A-1+’ ratings on the debt programs and instruments of those Irish banks where they are guaranteed until maturity by the Republic of Ireland.

“The outlook revision reflects our opinion of the rising economic policy challenges stemming from the contraction of the key housing, construction, and financial sectors, which have spurred many years of strong economic growth and fiscal consolidation,” said Standard & Poor’s credit analyst Trevor Cullinan. According to the European Commission, property-related tax (capital gains tax and stamp duty) accounted for 15% (3.8% of GDP) of total tax revenues in 2006, falling to 8% in the first eight months of 2008, the single most important factor in the deterioration in the general government balance. We have observed that general government debt levels also increased substantially between 2007 and 2008, by more than 16% of GDP, as a result of the widening deficit, although a substantial portion of the increased indebtedness (10% of GDP) remains in Exchequer cash balances as a liquidity buffer.

We note that the government has also extended guarantees to seven domestic credit institutions through Sept. 29, 2010, increasing general government guaranteed debt to an estimated 228% of GDP in 2009. Banking system exposure to the property and construction sector of about one-third of total loans (excluding interbank lending) suggests a high risk of asset deterioration at these institutions.

The ratings on the Republic of Ireland are supported by what we view as the flexibility of its economy, high per capita income, and a favorable demographic structure. The government’s commitment to contribute 1% of GNP per annum to the National Pensions Reserve Fund (NPRF), in our opinion, reduces the fiscal burden of population aging more than in some other European countries. However, the government is expected to use NPRF assets to assist in funding an estimated EUR10 billion (5% of GDP) recapitalization of its domestic banking sector.

“The negative outlook reflects our view of the likelihood of a downgrade if ongoing fiscal measures to recapitalize the banks and boost the economy fail to improve competitiveness, diversity, and growth prospects, thereby leaving a more difficult-to-manage debt burden,” said Mr. Cullinan. “Conversely, the negative outlook could revert to stable if the government’s strategy is successful and allows public finances to return to the stronger position of recent years,” he added.

Why is this important? This makes it more difficult/expensive for us to borrow. This is a very negative outlook – and could be a portent of further downgrades. More over at the pin.

Irish bank bailout, part 3

The Government will pump €5.5 billion into three of its largest banks after the collapse of the country’s property market and the impact of the global financial crisis eroded their capital.

The government will inject €2bn into Allied Irish Banks, the biggest lender by market value, and €2bn in Bank of Ireland, the Department of Finance said. Anglo Irish Bank will get €1.5 billion and the Government will control shares with 75% of the Anglo Irish voting rights.

Continue reading “Irish bank bailout, part 3”

Fitzpatrick resigns

I really am absolutely puzzled by the Irish Times headline:

FitzPatrick is first high-profile Irish casualty of global crisis

How, exactly, is he a casualty of a global crisis?

What have toxic US CDOs got to do with the transfering €87 million in loans with Anglo to another bank before the group’s September 30th year end?

Or indeed, is it coincidental that the same pair of directors at Anglo who have resigned, Fitzpatrick and Lar Bradshaw, are also under “investigation” by the Irish Stock Exchange for insider trading?

Is it also coincidental that they chose to resign at 9pm on the Thursday that the Dail breaks up for Christmas?

Is their relationship to the DDDA also coincidental to their resignation?

I simply do not accept that the Anglo Irish house of cards was brought down by anything other than our bursting property bubble and nonsensical lending.

Blaming the international crisis for Fitzpatrick’s resignation also makes no sense.

Anglo Irish Bank – a lesson in an Irish solution…

Chairman of Anglo Irish Bank Sean Fitzpatrick has resigned. The €87m figure could lead to serious problems for the bank, with the bank now only worth €250m in total.

The Financial Regulator has known for months, so the Government has known for months, and still they went ahead and guaranteed Anglo Irish Bank. We could see the Government stepping in to save Anglo.

And this very interesting stuff from Shane Ross from last year about the relationship between the DDDA and Anglo.

Continue reading “Anglo Irish Bank – a lesson in an Irish solution…”

Lenihan: We didn't notice the downturn

So said that Sunday Independent yesterday. It went on:

Mr Lenihan effectively admitted that the Government only became aware of the “decline” two months after he had been appointed Finance Minister. He said: “When we first saw the sign of decline in July …”

While I think the headline does not entirely warrant the content, it does say something about the Government’s inability to see what was coming down the line. Indeed their actions thus far point to a make-it-up-as-you-go-along strategy. But in fairness, they were not the only ones.

July was the month that the ESRI declared we were facing a recssion, which perhaps crystalised the minds of some politicians and commentators. The ESRI estimates looked low-ball to me at the time – and I said as much. I added:

As for the recent rise in unemployment, things are going to get much worse I fear. Unemployment hit 5.7% according to CSO figures released last week. That means 217,400 people out of work.

Now double it. 10% in 2009, or half a million people out of work. How bad would that be for the economy? Fundamentals are sound my ass.

That was July 6. Glass half full left a comment completely disagreeing with my forecast (which I based on what I was hearing anecdotally, and on what I would call a common sense view of the construction sector, the unwinding property bubble, banks that had overextended themselves, and the estimated 6 months that is given for the collapse of Bear Stearns to filter through the international monetary system). Some of the commentators over on Property Pin helped to crystalise my own views. Glass half full said:

I fear the litany of media reports about recession may have got to you. I don’t agree with your 10% unemployment forecast for next year. It is my view, and it’s only a hunch of course, that unemployment could reach 6% next year but no higher than that. As for the cycle we are in now, well yes troughs happen every so often and we are entering one now.

Yes, shoot the messenger. Could reach 6%? We’ve passed that already. However only this weekend, 6 months later, does Mr Lenihan come round to the more pessimistic view:

Unemployment is likely to rise to 10 per cent of the workforce next year, Brian Lenihan, the Minister for Finance, has warned, meaning it will have doubled in the space of a year.

I am no economic genius. Nor am I a fortune teller. But it was clear a very long time ago that the economy, and specifically employment, were in very serious trouble. Just the number of workers involved in the construction sector was reason enough to predict 10% unemployment in 2009. And Lenihan, it appears, struggled to see that coming.

Update:
South reminded my of the Economist’s own forecasts about the Irish economy, published back in November 2007.

* The fiscal position is deteriorating, and this will place constraints on government expenditure. A deficit is expected by 2009.
* GDP growth is expected to slow sharply in 2008, mainly because of the ongoing slowdown in the previously overheated property sector. However, there is a real risk of recession.
* Unemployment is expected to rise over the outlook period, as the construction sector shrinks,

€10 billion Irish bank recapitalisation

Why does it feel like Ireland will be seeking IMF assistance within 12 months? This strikes me as a very cack-handed response…

The Government have just put a statement up on the Department of Finance website. Serious stuff.

The Government has today decided on an approach to the recapitalisation of credit institutions. The Government’s objective is to ensure the long-term sustainability of the banking sector in Ireland and to underpin its contribution through the availability of credit to individuals and businesses in the real economy. This initiative will help to foster and encourage the flow of funds to the economy, and limit the impact of financial market difficulties on businesses and individuals.

The Government noted that recapitalisation is recognised by the European Commission as one of the key measures that may be used by Member States to preserve stability and proper functioning of financial markets, and that it believes that in current market conditions even fundamentally sound banks may require additional capital to respond to widespread market perception that higher capital ratios are appropriate for the sector internationally.

The Government decision followed the Minister for Finance’s statement of 28 November 2008 which confirmed the State’s willingness to supplement and encourage private investment in the recapitalisation of credit institutions in Ireland with State participation.

In that context, the Government has decided either through the National Pensions Reserve Fund or otherwise and subject to terms and conditions, to support, alongside existing shareholders and private investors, a recapitalisation programme for credit institutions in Ireland of up to €10 billion.

The State’s investment may take the form of preference shares and/or ordinary shares and the State may where appropriate participate on an underwriting basis. In principle existing shareholders will be expected to have the right to subscribe for new capital on the same terms as the Government.

A key principle in the operation of such a fund will be to secure the interests of the taxpayers through an appropriate return on, and appropriate terms for, the investment.

The next step in this process will be for the Minister for Finance to initiate detailed engagement with the credit institutions themselves in respect of specific proposals.

In order to safeguard fully the interests of the taxpayer, State investment will be assessed on a case-by-case basis in an objective and non-discriminatory manner, having regard to the systemic importance of the institution, the importance of maintaining the stability of the financial system in the State, and the most effective and economical use of resources available to the State and each credit institution’s particular requirement for capital. Any State investment will be undertaken in line with best practice in the EU and elsewhere and consistent with EU State aid rules and in particular the recent European Commission communication on recapitalisation.

Recapitalised institutions may be required to comply with such requirements as to transparency and commercial conduct as the Minister sees fit.

The National Pensions Reserve Fund Act, 2000 will be amended, as necessary.

Discussions with the relevant credit institutions are ongoing, and the institutions continue to progress proposals for private investment. Institutions are being asked to submit their proposals by early January.

The Government guarantee Scheme remains in place.

You really have to wonder what on earth the people in the Department of Finance are thinking. This strikes me as extremely poorly thought out, and smacks of interference from the banks themselves. Brian Lenihan should resign. (I call for these things an awful lot, don’t I?) And does anyone remember the only recent announcements that Irish banks were well capitalised? Or that PwC report that said they were well capitalised?

RTE link.

Beamish & Crawford brewery to close

Heineken Ireland said:

“The high costs of operating two breweries in the city, difficulties associated with expansion at the Beamish & Crawford facility and excess brewing capacity at Heineken Ireland, makes the future of the Beamish & Crawford plant unsustainable.”

It’s a sad day really. Cork had two breweries in the city centre, not it will be one big brewery. I wonder what the site will be changed into, it is a perfect location for *thinking as imaginative property developer* as many shoebox apartments as we can squeeze behind the facade of the listed building.