Oaktree to take control of McInerney

Published:  16 August, 2010

DUBLIN: Oaktree Capital, a US private equity group, is in talks to take control of McInerney Holdings, the debt-laden Irish housebuilder, the Financial Times reported today.

McInerney, which also builds houses in the UK, has struggled with a €236m debt pile since the collapse of the Irish housing market in 2008. It confirmed that it was in "advanced discussions" with an investor "regarding a substantial injection of new capital".

Oaktree, which specialises in investing in distressed companies, has been in talks about a possible equity injection of up to €40m of new capital into the housebuilder.

As part of such a debt restructuring McInerney's lenders, which include Lloyds, RBS and BBVA, are expected to write off some of their debt before injecting the capital.

"McInerney still has good land holdings and so the logic is that if Oaktree puts in the right amount of money, then it will have the working capital to get going again," an FT source said.

McInerney, in common with the bulk of bank-owned house builders, has found itself restricted in its ability to reinvest money from home sales in new land and construction activities. It has been using turnover instead to repay the banks.

McInerney has experienced a painful slide in the value of its assets and since 2008 has written down its land bank by 50% in Ireland and 40% in the UK.

Last year, McInerney sold 756 new homes across Ireland and the UK, compared with 1359 the previous year, and it recorded a pre-tax loss of €25m.

Shares in McInerney – which appointed Goldman Sachs as its financial advisers in March – have fallen 75% since the start of the year and they were flat on Tuesday at €0.05.

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