Maltese company to ‘buy out’ Hotel Phoenicia’s Irish debt

Set up by the Irish government in 2009, absorbing billions of so called ‘toxic debts’ from major banking institutions, NAMA took over the Hotel Phoenicia debt from the beleaguered bank Irish Nationwide Building Society (INBS).

Hotel Phoenicia operators Cuffe (Malta) Limited is in the process of re-financing its debt with an “alternative banking institution outside of Ireland.”

Cuffee (Malta) Limted explained that these negotiations will be concluded by the end of the year.

Further investigations conducted by this paper have confirmed that the negotiations are being held with a locally based company which had expressed interest into buying the landmark hotel when it was put up for auction in 2007.

It remains unknown if the refinancing of the Phoenicia loan would change the composition of the board of directors, however the negotiations are reported to have led the Maltese investors to be negotiating an “excellent deal” with NAMA.

Informed sources have told MaltaToday, that while NAMA is currently handling “hundreds” of properties scattered around the world that were taken over to cushion the Irish banking crisis, the loan that concerns Hotel Phoenicia is expected to be “bought out” at half the original value.

The move will now land the new investors with a landmark hotel at a far less price that what was originally bid in 2007, and with the added bonus of a recently granted Mepa permit for an expansion, adding 83 new rooms to the fairly limited complex which hindered further profitability.

So far the property is owned by six Irish investors, but the Malta based company Cuffee (Malta) Limited is administered by two directors: Irishman Ray Byrne and Maltese national Jean Pierre Ellul Castaldi.

But among the hotel’s directors is 65 year-old Paddy Kelly, Ireland’s most notorious developer who  is reported to owe Irish banks almost €1 billion.

Kelly, together with another handful of mega developers in Ireland are being blamed for the banking crash in Ireland.

Last year, he went on national radio RTE 1 and baldly declared that he owed “hundreds of millions” of euros to various banks.

Those banks have since been left exposed, and Kelly appeared before Dublin’s High Court admitting he was “contemplating” on initiating brankruptcy procedures.

Kelly, a very frequent traveler to Malta, had showed interest in the Phoenicia Hotel in Malta through his main company Redquartz, which lists three “active developments” – a €100 million ski resort in Pragelato, Italy, a US$1 billion development in Sarasota, Florida and the €1.5 billion redevelopment of Bray town centre in Wicklow.

Yet there is no sole holding company in the Paddy Kelly empire; instead there are scores of smaller entities held together by the 64 year-old businessman and his family. Likewise, his borrowings have been brought down through a complex corporate structure, involving dozens of companies, joint ventures and partnerships, in Ireland ond overseas.

Banks are reportedly still examining their books, figuring out how much Kelly-related companies have borrowed and what level of security they have in place over the money.

Anglo Irish Bank, for example, has advanced almost €1 billion to Kelly developments, and it was Anglo’s decision to withdraw a credit line that forced his hands last year.

Speaking to Irish journalists from Malta where he was until two weeks ago, before Irish Prime Minister Brian Cowen announced his country was opting for a €70 billion EU-IMF bailout, Paddy Kelly made no comment on his financial situation in the short term.

Speaking in Dublin last week, the head of portfolio management at Ireland’s National Asset Management Agency (NAMA) John Mulcahy, told the Dail (Irish Parliament) committee on Public Accounts that the Hotel Phoenicia in Malta was among the assets under their administration.

As Mulcahy stressed that the Irish taxpayer will not be led to pay out the bad debts incurred by the insolvent developers, NAMA is still considering if it will take over the rest of the same developers’ personal assets.