O’Flynn ‘shocked’ as examiner appointed

The company that bought the €1.8bn debts of the O’Flynn Construction Group for just over €1bn has secured the appointment of an interim examiner for four key companies within the group.

US private equity giant Blackstone, which bought the O’Flynn Group loans in May from Nama, has, through one of its subsidiaries, Carbon Finance, also served demands on the company’s two main shareholders, Michael and John O’Flynn, for the immediate repayment of their “substantial” debts.

If repayment is not made it intends to enforce security over assets of the shareholders, including their shares in the parent company, resulting in an event of default on the corporate facilities, the High Court heard yesterday.

In the absence of payment, it intends to appoint Grant Thornton as receivers over certain assets of other group companies in Ireland, the UK, British Virgin Islands, and the Isle of Man. It does not intend to appoint receivers over assets of the four firms, as it believes they could survive as a going concern once certain conditions are met.

Last night, Michael O’Flynn said he is “completely surprised and shocked by the decision of Blackstone Group to have an interim examiner appointed to O’Flynn Construction Group. The O’Flynn Group loans and some separate personal loans are fully serviced and all payments are up to date”.

“[This] development represents a very unexpected and aggressive move on the part of Blackstone Group. I am reviewing this with my legal advisers and will respond appropriately in due course.”

The four companies are O’Flynn Construction Company; O’Flynn Construction BTC; O’Flynn Construction (Rochestown), and Eastgate Developments (Cork).

The directors and principal shareholders of the companies have not been “co-operative” with Blackstone and that, combined with a lack of information about the group’s accounts, led to the petition being brought, the court heard.

While Carbon believes the companies are insolvent, it also believes they have a reasonable prospect of survival and envisages a scheme of arrangement that would involve writing off a significant portion of the companies’ secured debt and further investment of €16m over five years for purposes including to complete and rent out units within the group’s property portfolio.

Mr Justice McGovern granted court protection to the four companies and appointed Michael McAteer of Grant Thornton as interim examiner. Court protection will continue until the hearing of the petition on August 27 on condition an interim accountant’s report, to be prepared by Kieran Wallace of KPMG, is provided by August 7.

Paul Sreenan, SC, representing Carbon, said the co-operation of the directors of the O’Flynn companies, who include Michael and John O’Flynn, is required for preparation of the report and his side considers that would be forthcoming only if the court appointed an interim examiner.

In its petition, Carbon said that, having reviewed the options, it had concluded, based on the limited information available to it, “value optimisation” in the case of the companies required a restructuring likely to involve fresh investment of funds, significant debt reduction and operational improvements designed to maximise future returns.

It said the four companies are members of the O’Flynn Group, based in Ballincollig, Co Cork, and comprising 80 entities. None of the other companies are subject of this application, it said.

Carbon said it has access to little substantive information about the companies, whose directors and principal shareholders had not to date been co-operative with it. The group had failed to provide audited accounts for 2013 to Carbon and had stipulated conditions for a meeting last Monday which were not acceptable to Carbon.

In those circumstances, and because Carbon believes there were exceptional circumstances outside its control, it decided to bring the petition.


Lifestyle

The Cork-led band played a superb gig in Dublin, writes Ed Power.REVIEW: The Murder Capital, Vicar Street

Lack of physical activity also causing disturbance of children’s sleep patterns.Under-fives suffering lack of sleep from extended screen time, doctor says

Kya deLongchamps despairs over the simple ways we can wreak havoc on our property's valueHow we vandalise our own homes

With the housing crisis, renovating a run-down property is worth considering if you have the inclination, time, funds and a good team of contractors around you, writes Carol O’CallaghanBehind the scenes in The Great House Revival

More From The Irish Examiner