Sinn Féin - On Your Side

Minister must clarify IBRC position on Siteserv – owners get paid while the state as senior bondholder gets burned

3 April, 2012 - by Pearse Doherty TD

Sinn Fein TD and Finance Spokesperson Pearse Doherty has called on Minister for Finance Michael Noonan to make an immediate statement to explain how IBRC (formerly Anglo & Irish Nationwide) is being allowed to be burnt on the sale of business support company Siteserv, while the company's shareholders make a profit.

Doherty said the government and the Minister's position on the rights of senior bondholders seemed to be solidly in favour of paying them in full, until it came to the state’s right as a senior bondholder.

Doherty said:

“The Siteserv company has been in the news for the past number of weeks because of allegations of conflicts of interest against a senior solicitor firm. However, the most significant aspect of this deal from a taxpayers’ perspective is how a deal on the business support company, which is in debt to IBRC, allows IBRC to be burnt by 70% on what it is owed while the owners of the company make a profit.

“Siteserv has been acquired by Denis O Brien for €45.42 million euros. The company reportedly owes IBRC €150 million and it is 70% of this figure which will not be repaid to IBRC. However, at the same time, the owners, ie the shareholders, including chief executives at the broke company, will receive €4.96 million, or €3.92 per share. This is 96% over and above the share price of the company last week.

“The Government has drilled the Irish public with the mantra that the rule of the markets when a company goes broke is that the shareholders and owners see their interest wiped out first, then the junior bondholders, then the senior bondholders. In this case, that seems to have been turned on its head, with IBRC as a senior bondholder taking a hit of over €100 million, and owners walking away with almost €5 million.

“This goes completely against previous statements by IBRC and NAMA that they would go to the ends of the earth to pursue losses from vested interests to make sure the taxpayer gets repaid.

“This Government has refused to impose losses on senior bondholders which gambled billions in Irish banks, ensuring everybody, from shareholders to the taxpayer, picked up the tab for those losses. Now the state is the senior bondholder, the government appears to be happy to let us take a hit that is larger than necessary, so the shareholders can get paid.

“The Minister needs to immediately make a statement on this matter.” ENDS

Connect with Sinn Féin