Wednesday 2 June 2010

Glass Bottle consortium paid €100mm ore than under bidder

The consortium that bought the Irish Glass Bottle site in Dublin in 2006 paid up to €100 million more than any other bidder offered, The Sunday Business Post has learned.

The purchase of the site for €412 million has led to investigations into the activities of the Dublin Docklands Development Authority (DDDA),which formed the Becbay consortium with property developers Derek Quinlan and Bernard McNamara.

The purchase price for the site is expected to be central to a new investigation into the DDDA by the Comptroller & Auditor General, sources familiar with the inquiries said.

The C&AG will attempt to ascertain how the consortium arrived at the €412 million valuation. It has already emerged that the DDDA did not get a professional valuation of the site before entering the deal with the property developers.

Evidence has emerged in recent weeks that the underbidder, believed to be developer Sean Mulryan, offered between €70 million and €100 million less than the Becbay bid.

The site is now valued at around €60 million and sources said the National Ass et Management Agency (Nama) would devalue it further by imposing a ‘haircut’ of between 80 and 90 per cent on the related loans.

The investigation comes as the DDDA considers its future options for the site. A report commissioned by the government from accountancy firm FGS has outlined a number of options, including offloading the DDDA’s stake in the site on the open market.

Regardless of what option it takes, FGS has warned that the agency will be forced to take a massive hit on its investment. Last week, the government published three reports into the DDDA, highlighting serious failures within the agency.

The site was part-owned by the Dublin Port Company, which was a major beneficiary of the Becbay buyout. Its former chairman, Joe Burke, has confirmed that some of the proceeds were used to fill a €73 million hole in the company’s pension fund.

The Dublin Port Company’s annual report for 2005 shows that the pension fund was short by €72.7 million.

A year later, it declared a once-off profit of €109 million from the sale of the Irish Glass Bottle site, which was used to top up the pension fund, pay off borrowings and support its capital investment plans.

Sunday Business Post

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