View from Dublin: more megaphone diplomacy from Sean Quinn and family as fight continues
SEAN Quinn is back. Well, back talking to rallies of local supporters, that is. The former billionaire told a gathering of several hundred last Tuesday night that he wanted to buy back his former businesses.
He said he could have raised the finances, but has not been able to do a deal under agreements reached between the current shareholders. His claim that he had been “stabbed in the back” by his former company, implies he had believed he would be able to buy back at least some of the equity in the business.
Quinn Industrial Holdings (QIH) owns the plastics, cement and packaging business of the former Quinn Group. The owners bought these units for €98m nearly four years ago.
QIH is 88% owned by US hedge funds Brigade Capital, Contrarian Capital and Silver Point. The remaining 22% is owned by a group of local businessmen and former Quinn Group management.
The Americans hold the ‘A’ voting shares and the others hold non-voting ‘B’ shares. Any chance Quinn believed he had of buying out the Irish shareholders was completely nailed down by the shareholders’ agreement. The rules are completely watertight and specify that if one of the B share owners transfers his shares to an outsider, all of the other managers are legally obliged to inform the US investors as soon as they become aware of it.
If such a transfer happens, it can trigger the compulsory purchase of that person’s shares by the US investors for a nominal sum. The US investors are sitting pretty as they bought the businesses at a bargain price.
They are growing profits and are collecting 10% interest on the money they have lent the company. This amounted to €16m in the first two years. Hedge funds are always willing to sell, but only for the right price. If Quinn wants to buy, he and the family will have to write a very big cheque. Mind you, I still wouldn’t bet against the family returning to the business.
Meanwhile, the Quinns are preparing to ramp things up ahead of their legal actions against IBRC and the state. Expect more megaphone diplomacy.