Embattled Kelly in talks with Anglo to save property portfolio

10 May 2009  By Ian Kehoe

Property developer Paddy Kelly is in negotiations with Anglo Irish Bank this weekend in an effort to prevent the bank from seizing his entire property and business portfolio.

Kelly held a series of meetings with the nationalised lender in recent days, during which he was told that the bank intended to appoint receivers over all his projects that they had financed. However, it is understood that Anglo has since softened its approach, and that Kelly is now close to agreeing a temporary loan facility with the bank.

Kelly already owes the bank €700million,and has admitted that his liabilities exceed his assets. He recently told the High Court that he was exploring the option of bankruptcy, leading Anglo, AIB and Bank of Ireland to appoint receivers to projects backed by the Dublin businessman.

The new deal with Anglo is designed to enable Kelly to advance a number of his projects until the establishment of the National Asset Management Agency (Nama).

At that point, it is expected that a large number of Kelly’s projects will be moved to Nama, which is being set up as a commercial semi-state body to take over the development loans of the banks.

Last week’s meetings came after Kelly asked Anglo to restructure his €700 million in debt as part of a plan to avoid bankruptcy. He proposed that the bank should roll up interest on existing loans and provide a new loan facility.

While Anglo was poised to appoint receivers over companies in the Kelly group late last week, the bank is concerned about the effect of such a move on Kelly’s business partners and co-investors.

The developer has 40-plus partnerships in Ireland and overseas, and is involved in projects with total debts of more than €2 billion.

The complexity of the deals has prompted Anglo to hold off from moving on Kelly’s various businesses. While many of the projects he backed are not in difficulty, he is understood to be facing particular problems with a $1 billion scheme in Florida. He also backed Tulfarris House & Golf Resort in Wicklow and the Thomas Read group of pubs and restaurants, both of which are in receivership.

Anglo recently seized the assets of the Dublin company behind Pragelato Village, a €100 million, five-star ski resort in northern Italy that was backed by Kelly.