• Irish bad bank casts shadow

 

The imminent prospect of a so-called "bad bank" in Ireland that will take on the loans made by Irish banks has brought cheer to the banking community and the wider economy.

But until it is made clear which loans are being put into the new vehicle it casts a shadow over a number of hotel deals.

One of the highest profile is Jurys Inn which was bought for EU1.165bn in 2007 by Quinlan Private at the peak of property boom. Among the banks in the syndicate supplying debt on the deal were Anglo Irish, AIB and Ulster Bank.

Both Anglo Irish and AIB are expected to inject a significant portfolio of their lending into the new National Asset Management Agency (Ulster Bank is a division of the UK's RBS).

During July, Jurys Inn raised Eu70mto assist in its planned expansion. Eu17m came from private clients of Quinlan and Eu17m came from the Oman Investment Fund which took a 50% in Jurys last year for an undisclosed sum. The remainder of the Eu70m came from Jurys debt backers.

Quinlan's clients have also been tapped for cash to support the Marriott portfolio it bought from RBS in 2007 for £1.1bn. It is understood about Eu17m has so far been raised by Quinlan and its partners to pay the debt banks, led by RBS, as part of the capital restructuring process.

According to Irish press reports, this sum is to help persuade RBS to amend loan-to-value covenants and interest cover covenants. The portfolio is understood to be struggling to pay make its interest payments.

Another aspect of NAMA likely to impact some hotel deals is the agency's ability to chase developers for debts. The Irish media highlighted the alleged move to Switzerland by Derek Quinlan, the founder of Quinlan Private who quit the group in July. Ireland's finance minister Brian Lenihan responded specifically to the example of Derek Quinlan stating that debtors would be pursued through foreign courts if necessary.

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