Micheál Martin (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

69. To ask the Minister for Finance about reports of his comments in September 2013 to the First Minister, Mr. Peter Robinson, that the Government and Stormont would work together with the Pacific Investment Management Company from the United States of America, which at the time was the only company bidding to buy Project Eagle, which subsequently was bought by Cerberus; and if he will make a statement on the matter. [40867/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On 27 September 2013 I travelled to Belfast to speak at the Confederation of British Industry's, Northern Ireland Annual Lunch.  While in Belfast I met with First Minister, Peter Robinson, and the Finance Minister, Simon Hamilton at Stormont Castle in advance of the lunch to discuss NAMA's activity in Northern Ireland.

First Minister Robinson had raised concerns in the press earlier in the week that NAMA's policies in Northern Ireland may constrain Northern Ireland's recovery and so it was opportune that we were able to discuss this very important issue. We discussed NAMA's involvement in Northern Ireland's economy generally and the recent interest expressed in NAMA's Northern Ireland portfolio.

NAMA's strategy in Northern Ireland was aimed at generating sustainable activity and transactions in the Northern Ireland property market both through orderly sales and through targeted initiatives such as vendor finance and joint ventures that were designed to overcome the lack of funding in the market and enhance the future value of Northern Ireland assets through a programme of investment funding.

We also discussed how NAMA's concerns reflected the concerns of members of the Northern Ireland Executive about the negative impact "fire sales" would have on the economy.

We discussed the very strong level of engagement NAMA had in Northern Ireland with all key stakeholders, which was supported by NAMA's Northern Ireland Advisory Committee.  NAMA was investing to enhance the value of its assets in Northern Ireland and had advanced significant amounts of new money into the Northern Ireland economy to assist in such projects as the construction of a new 95-unit housing development in Milmount, Dundonald, close to Belfast and to complete Lanyon Plaza and the Soloist Building which form part of a landmark office development in the centre of Belfast. This investment came at a time when there were very few other sources of funding for projects in Northern Ireland. As was also being reported in the press at the time, NAMA was working closely with local housing authorities and approved housing bodies in Northern Ireland and had recently announced the sale of over 50 apartments to Oaklee Housing Association in Belfast.

As the Deputy will be aware, prior to this meeting, on 24 June 2013, I had received an unsolicited expression of interest for the NAMA Northern Ireland Loan Book, via the then NI Minister for Finance Sammy Wilson, from Brown Rudnick on behalf of its client, PIMCO.

The Brown Rudnick letter had suggested a semi-exclusive sales process and put forward a number of suggestions regarding the future management of the portfolio for Minister Wilson to consider.  Typically this would not be a cause for concern.  An interested party will often seek a closed or exclusive sales process because it is in their interest to remove competition and increase their chances of success.  So, while it may have been somewhat naive to suggest such an approach, it was not surprising and gave me no cause for concern as I was aware NAMA would favour conducting an open market process for any such sale.

In my reply to Minister Wilson, of 25 July 2013, I advised that Brown Rudnick should approach NAMA directly with their expression of interest and clarified that NAMA would not run an exclusive process but would have to run a competitive and transparent sales process.  At that time, I also referred the letter I had received to NAMA for their information.

These documents are in the public domain and are available on the Department of Finance website.

Following my receipt of this letter and prior to this meeting in Stormont, NAMA also had received a third party approach on behalf of PIMCO to sell the loan portfolio on an exclusive basis.

As a result of these communications, it was known to all at the meeting that an interest had been expressed on behalf of PIMCO in acquiring NAMA's Northern Ireland portfolio on an exclusive basis.

During the meeting I stressed two key considerations that NAMA would have to take into account in any potential sale: process and price.  That is, NAMA would not enter into any exclusive sales process, as this would militate against achieving best value for its assets.  Rather, if a sales process was undertaken, NAMA would openly market its assets as part of a competitive process.  Furthermore, NAMA would have to be satisfied that it had achieved best value.

I acknowledged that, to my knowledge, at that point in time, only one party had expressed interest in acquiring NAMA's Northern Ireland portfolio which we know was PIMCO.  I acknowledged this during the meeting as a challenge to moving forward with PIMCO's interest, pointing out that a sales process could not be undertaken with a single interested party.  As I had stated previously in my reply to Minister Wilson on 25 July 2013, a single expression of interest would present a challenge because NAMA would not launch an exclusive sales process.

However, I indicated that there was likely to be a way forward if this expression of interest was credible.  It was reasonable to expect that if one party had expressed credible interest, there may be other parties who may also be interested.  I indicated that as in the past, as the result of single expressions of interest, it was open to NAMA to test the market and determine if there was sufficient interest (i.e. other interested parties) to conduct an open sales process that would maximise value.

As is now well established, following the expression of interest from PIMCO, NAMA did test the market interest in its Northern Ireland loan book and ultimately appointed Lazard, a major international investment bank, in January 2014 to advise on and oversee the sales process for Project Eagle.  Based on its assessment of the market, Lazard invited eight other major global investment groups, alongside PIMCO, to participate in the process.  NAMA, in line with its well established policy on asset and loan sales, instigated a competitive market sales process in February 2014.

Sales processes often emerge through reverse enquiries.  This is a normal commercial practice in any market.  After an approach is made at an attractive price, the key for NAMA is to test that by reference to an open market process, which was clearly the case in this instance.

With respect to the recently published minute of this meeting taken by the Private Secretary to the First Minister, I would point out that - while not inaccurate - this was not an agreed minute of the meeting and so would not have had the benefit of comment by myself or my officials.  The minute would naturally have reflected the elements of the meeting deemed most important by the minute taker and as it is not a verbatim record of a meeting will naturally reflect the minute taker's interpretation of what was said as opposed to what may have actually been said or intended.

Regarding a reference to "working together" in the minute - as I have previously outlined (PQ41 of 3 October 2013) both sides shared an understanding of the importance of NAMA to the economy in Northern Ireland and the care needed in dealings in Northern Ireland regarding NAMA's management of the portfolio.  I did not intend to imply that my administration would work with PIMCO or any other potential buyers in any way but rather I would have expressed my confidence that NAMA would be able to work with potential buyers to overcome any difficulties and I would have committed to maintaining an open dialogue between administrations to the extent that was helpful.

As is on the public record, subsequent to this meeting, I discussed the progress of the sales process on a limited number of occasions with my counterparts in the Northern Ireland Executive.  Through all of these discussions, I made it clear and maintained that the commercial decisions, as always, remained solely for NAMA.