Tag Archives: Allied Irish Banks

Today my mind was stopped by a Guardian article of a different kind (at http://www.theguardian.com/world/2014/jun/23/sir-tony-oreilly-irish-billionaire-insolvent). The headline was interesting enough ‘Bank pulls the plug on Irish billionaire who owned Independent‘, but that was not the reason for my interest. To be honest, it was not the fact that some rich ‘boy’ was hitting bottom either. You take any spoiled millionaire brat and the moment he is funding his trust into cocaine, you know he is worse off than whichever other rich person losing it all.

The following quotes are not the interesting part, but they are essential for painting the picture. “O’Reilly went on to a successful business career, rising to be chief executive and chairman of the giant US food group Heinz“, and whoever knows about their Ketchup, knows they have the good stuff! “Lawyers for Allied Irish Banks said on Monday the bank had run out of patience with O’Reilly’s efforts to repay €22m (£17.6m) of loans and a further €23m due from two of his investment companies. The court was told he had further debts of €195m. AIB accused the fallen tycoon of being insolvent and asked the courts to enter a judgment against him which would allow the bank to take control of key O’Reilly assets” gives us little more than the position he has gotten themselves into and “O’Reilly told the bank last month he had sold investments worth more than $150m in the past three years, all of which had gone to repay borrowings. But AIB claimed only a fraction of that sum – $300,000 – went towards repaying its loans. Other creditors, who are owed about €195m, have agreed not to pull the plug to give O’Reilly more time to sell his assets in an orderly way” gives us only a small indication on the matter how things are resolved. The next shows that this is no dumb boy, we know that the Irish can at times be pretty clever, yet the quote “He became chief executive, based in Pittsburgh, in 1979, and 12 years later was the first non-family member to become chairman. O’Reilly helped to transform the firm – its market value rose from $908m (£533m) to $11bn.” implies him to be a genius. When you change a company and up the value by 1100%, you are what some might say, the stuff of legends, which is only confirmed by “When he bought into the Dublin media company, it had a turnover of just €12m but under his ownership it grew into a worldwide company which at one point included the Independent in the UK as well as publications in Australia and South Africa. He stepped down as chief executive of the company on his 73rd birthday”

There is a lot more to the Independent News & Media group which runs into the billions and then it suddenly hit me. This was all strangely similar to the movie Meet Joe Black, made over a decade before these events were taking place. Was Anthony Hopkins portraying Sir Anthony Joseph Francis O’Reilly? If so, I would love to hook up with his daughter (Claire Forlani, we men have dreams too after all). His ownership also included Waterford Wedgwood plc; those who care about China porcelain will know it to be one of the most revered brands ever.

So what is this about?

Things do not add up completely as I see them. It is like watching a pattern that does not really exist. Giving into it is merely voicing the conspiracy theorist in us. Take this quote from Wiki (not as an academic value, mind you). “The markets reacted positively to the news, especially to the explicit truce between the O’Reilly and O’Brien shareholder blocs, with Denis O’Brien voicing public support for Gavin O’Reilly as CEO-designate“, the approach before was that he had gone in so deep that his hunger for media truly rivalled that of Rupert Murdoch. A group, having assets in excess of 4.5 billion, whilst having almost 1.5 billion in debts. Some will not see any issue at this point. Consider that the revenue is almost at 1.7 billion and the profits are set at 110 million. So, even though not too bad, it is not a great position. This is what some might say a good time to start selling off the smaller parts. Of course this is still not on the mind of Sir Tony. This is where the Wiki quote becomes interesting. You see, Denis O’Brien seems to be the pushing element and his son is set to get the CEO position. So far there is an awful close resemblance to that movie ‘Meet Joe Black’. From the moment Gavin O’Reilly takes over and he is pushed out due to the pressure of Dennis O’Brien, it is a mere 3 years. By that time Dennis O’Brien holds onto more than twice the amount of shares the O’Reilly’s have.

This is part one. In this time, from my point of view, as the power is still firmly with the newspapers, Dennis O’Brien is already moving into telecom and radio stations. He is now regarded as one of the larger players in the UK. However, this is about Sir Tony O’Reilly.

When we see his assets, I almost see a picture of sliding technologies and Sir Tony did not move with his times. Whether it started with the removal from INM is uncertain. What is clear is that he had grown several businesses into behemoths, which makes the collapse of Waterford Wedgwood plc a mere ripple in a very large pond. The fact that his second wife is even wealthier than him should not matter, but the losses he and his brother in law (brother to his second wife) seem to tally towards half a billion.

Here we now see a certain pattern forming, even though thus far I have not mentioned the elements to that loom. Any person has values, profits, incomes as well as credibility. One element is the pushed change by Dennis O’Brien from the side of Independent News & Media. It goes however a lot further. Consider the situations the banks are in and have been in for at least 5 years. There are literally tens of thousands of people too far in debt with little chance to repay it. Then the information in the Irish Times hit me (at http://www.irishtimes.com/business/sectors/media-and-marketing/sir-anthony-o-reilly-locked-in-debt-negotiations-with-aib-1.1805920), and the one part I had almost ignored in the Guardian became a lot more visible. The bank, which was seen 4 times as ‘AIB’ in the Guardian article, gets a prominent place in the headline. So why is this an issue? Consider the following two quotes from the Irish times “A case has been listed for entry into the Commercial Court on Monday between AIB and Sir Anthony and two of his investment vehicles, Indexia Holdings and Brookside Investments” and “Brookside owns Sir Anthony’s coastal estate in Glandore, Co Cork, while Indexia is his private investment vehicle that holds his near 5 per cent stake in Independent News & Media and his share of the oil explorer Providence Resources“. So, there is no link, or so one would think. It is however weird that even in delayed matter, this is one customer that would repay the debts, so why this push? Is it not weird that forcing the hand of one party who will repay is somewhat strange in this day and age? Then we get this message (at http://www.independent.ie/business/irish/oil-giant-exxon-starts-160m-drilling-project-off-west-coast-29163728.html), which is more than a year old. Was oil found, is there a chance to find oil here? If not, then this is another half a billion bust for Sir Tony, making him pretty much broke. The following was found in the ‘ShelltoSea‘ site (at http://www.shelltosea.com/node/1890), considering that Providence resources (a Sir Tony company) is a partner in this then this quote “The Dunquin North and Dunquin South prospects hold combined recoverable reserves of 8.4 trillion cubic feet of gas and 316 million barrels of condensate, according to an offering document posted on Schlumberger Ltd’s IndigoPool Web site” means that there are vast amounts of money there, which makes the actions of the AIB odd to say the least.

Consider the Russian issues that are currently playing, whether they happen or not, will influence the value of the gas that was found. It is still the question whether oil will be found, it was not up to July 2013 as was reported through Reuters, yet the given options mean that there is still a vast amount for Sir Tony to hold on to his 750 acre cottage. It is the final link we get when we read this headline “Taxpayers will not lose money on the bailout of AIB” (at http://www.independent.ie/business/irish/taxpayers-will-not-lose-money-on-the-bailout-of-aib-bank-chief-30367989.html), So it was not about Sir Tony, it was about the other acts by the bank, holding onto the loans for Sir Tony that are now the issue of a possible upcoming forced fire sale. The banks statement “He added that the bank has paid more than €2bn to the State in fees and interest on rescue loans since the crash” give the message we were wondering about. The banks are slowly losing options, the money us due and as such, some visionaries are now under the hammer. Whether the acts of Denis O’Brien are at the centre of what could be seen as the fall of Sir Anthony Joseph Francis O’Reilly remains to be seen. The acts that are clearly within the realm of ‘the cost of doing business‘ are drawn in the sand. It reminds me of the quote Penn Badgley tells Zachary Quinto in the movie Margin call. ‘In the end one man wins, one man loses‘ is harsh and to the point, but as Zachary responds ‘You know that there is more to it than that‘ is equally correct. Two movies both created before the actual events that played out here are giving us the fact that sometimes life is like the movies, even the bad parts.

Sir Tony is a first eye witness to these events. What we at the sidelines see is that the banks are now slowly in a do or die presentation of liquidating what the banks regard as ‘risky investments’. For the most, we should be happy, but can we? The money remains gone and when the fire sale goes through and someone ends up finding any oil at a cost of 0.1 cent on the dollar, how many friends will the Allied Irish Banks end up with then, considering the boat load of scandals they were linked to?

Perhaps the most worrying part for most of us is not that a wealthy man has lost it all, but that banks are now closing ranks. We are so used to seeing the wealthy get away with proverbial murder shows that the banks are at the end of their ropes, which means that the little leeway we ones had is likely gone too. It should also be clear that this shows us all that the economy is nowhere near recovery; it is for the foreseeable future on a very tight arrangement with whomever has any actual wealth left.

A view we have not been introduced to until now.