Former Anglo boss’s company owes €370m

Sunday Business Post – A property company cofounded by the former head of Anglo Irish Bank in the North has borrowings of more than €370 million, including significant debts with Anglo.

PBN Property, which was set up in 2005 by former Anglo executive Neil Adair and property developer Patrick Kearney, has mothballed all its developments and is now in discussions with the National Asset Management Agency (Nama) about renegotiating its loans.

The agency took over PBN’s loans from Bank of Ireland last October and is also taking on its loans from Anglo and AIB, which are thought to run to hundreds of millions of euro.

The Belfast-based company said it had ‘‘considerable assets and loans’’ that came under Nama’s remit, and was considering a debt reorganisation as it transferred the loans to Nama.

PBN’s projects include offices, shopping centres and housing developments in Ireland and England. It also planned an £80 million regeneration project in Glasgow.

PBN is still controlled by Adair, who ran Anglo’s Belfast office from 1995 to 2005, and Kearney, a Gibraltar-based developer who was the first customer of the Belfast office.

After Adair left the bank, Anglo provided the funding to establish PBN and was the main lender on some of its deals, including the purchase of a shopping centre in Middlesbrough.

In accounts recently filed for 2009, PBN’s directors said they had liaised closely with all of the firm’s banks during the ‘‘meltdown’’ in the banking sector.

‘‘Some of these banks have been in such disarray that they have not been available to discuss future business plans. Each of the group’s banks have advised that they do not have funding available to undertake the group’s development projects and, as such, all of the group’s development projects have been mothballed awaiting improvement in the credit markets and residential mortgage market,” said the accounts.

At the end of 2009, PBN Holdings had £317.4 million (€372.5 million) in outstanding bank loans, on which it paid £19.9 million in interest that year.

The 2009 accounts list eight lenders to the company. As well as Anglo, AIB and Bank of Ireland, PBN has dealings with Ulster Bank, Bank of Scotland (Ireland), Northern Bank and the Progressive Building Society in Belfast, and Standard Life Bank in Edinburgh.

While turnover rose 13 per cent to £23.1 million in 2009, the company made an after-tax loss of £8 million from trading. It also recorded a £48.3 million writedown as it revalued its properties, leaving a total loss of £56.3million for the year. Shareholders’ funds fell to £7.1 million at the end of 2009, from £63.5 million a year earlier.

Based on work carried out as it prepared its ten-year business plan for Nama, the firm valued its property assets at £176.2 million at the end of 2009.However, the company’s auditor noted that the freehold and leasehold property ‘‘has not been recently professionally valued’’ and there was some uncertainty as to its exact value.

PBN also had ‘‘other investments’’ of £97.9 million, relating to unit trusts that hold properties in Glasgow and Manchester.

‘‘It is the company’s intention to work through the company’s asset base and convert long and medium-term property assets through the working capital cycle over the life of Nama,” said the accounts.

PBN had 135 staff in 2009 with payroll costs of £2.5 million. The five directors shared more than £539,000 in pay for the year, with the highest-paid director receiving £120,000.