O’Flynn to gain control of 500 acres in deal

Cork-based property developer Michael O’Flynn will gain control of around 500 acres of developmental site assets in Ireland and the UK as part of the resolution of his long-running legal dispute with US private equity firm Blackstone Capital.

The agreement will see an effective split of the O’Flynn Group’s portfolio of assets, with Blackstone gaining ownership of most of its investment assets, which have existing rental incomes attached, including Cork’s landmark Elysian apartment complex.

Mr O’Flynn, meanwhile, will acquire most of the group’s development assets; a move which will allow him to begin developing new residential property and commercial building projects in Ireland — Cork and Dublin, in particular — and the UK.

Part of the British assets of which he will gain control will be the much-heralded Haymarket site in Edinburgh.

Blackstone — via subsidiary company Carbon Finance — acquired the O’Flynn Group’s debts for €1.1bn from Nama, last summer.

After effectively attempting to call in some of the loans, Blackstone sought the appointment of an interim examiner for four O’Flynn subsidiaries, claiming the group was insolvent, despite Mr O’Flynn claiming all payments were up to date and both group and separate personal loans were fully serviced.

A subsequent High Court ruling, in August, ruled against Blackstone and temporarily returned the control of the property assets to the O’Flynn Group.

The High Court deemed Blackstone not to have acted in good faith when it applied for the interim examiners to be appointed to €1.4bn worth of loans. O’Flynn had been due to repay Blackstone €225m by the end of 2014 under the terms of its loans.

The group’s directors had told the US firm it had secured two fully funded purchasers to acquire assets from its portfolio in both Ireland and Britain, which it claimed would have met its year-end obligations.

At the time, the O’Flynn Group accused Blackstone of engaging in “a very elaborate and sophisticated, but ultimately ham-fisted, blitzkrieg” to take over its companies and assets; a charge Blackstone denied.

A ‘standstill’ agreement was struck between the two parties in December, which saw the legal battle adjourned until the end of January to allow the chance for a broader agreement to be reached.

At the end of last month, both parties extended that ‘standstill’ agreement for a fortnight (until yesterday) and announced they had reached a consensual resolution to their dispute.

Yesterday, the two parties announced they had reached further agreement and would be expanding the existing ‘standstill’ arrangement for another three weeks to finalise the details.

A joint statement, released yesterday, read: “Following further constructive engagement, Carbon Finance Ltd and Michael O’Flynn are pleased to announce that they have signed binding heads of terms under which Michael O’Flynn will acquire most of the development assets of the O’Flynn Group (which are largely in Ireland, but include some in the UK) with Carbon retaining the rest of the portfolio.

“The parties continue to work collaboratively on transitional arrangements. While the transaction is being completed, the standstill agreement has been extended for a further three weeks by both parties.”