SMURFIT BROTHERS SET FOR €77m PAYOUT IN POWERFLUTE TAKEOVER - Paper packaging entrepreneurs Michael Smurfit and Dermot Smurfit are poised to receive £65.6 million (€77.2 million) as a US private equity firm looks set to buy Finnish paper company Powerflute after five months of secret talks to revive a deal aborted last year.
Chicago-based Madison Dearborn Partners has secured agreement with Powerflute, founded by Dermot Smurfit over a decade ago, to proceed with a £268 million (€315.25 million) takeover offer for the company. It only marked a slight improvement on a failed £261.5 million bid for the paper firm late last year, says the Irish Times. But, crucially, the bid has now won the backing of some major shareholders this time - a month after Powerflute highlighted challenging market conditions, particularly for its packaging papers business, where profits dropped in the first half. “Our results were broadly in line [with expectations] but we were facing some headwinds and people sort of took that as maybe a decent time to get out,” Mr Smurfit told the newspaper. This time, Madison Dearborn secured an undertaking from the company’s main shareholder, Henderson Global Investors, including its Alphagen hedge fund unit, to sell its total 16.7% stake. It also agreed to acquire 81.7 million Powerflute shares and options from the Smurfit brothers, equivalent to a 27.5% holding, for 80 pence each. However, the offer to remaining shareholders has been set at 90 pence.
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BUSINESS AS USUAL FOR NAMA WITH €3 BILLION SALE OF BANK LOANS - Nama has shrugged off criticism from the State's most powerful spending watchdog by launching a €3 billion loan sale, the Irish Independent has learned.
The State agency pulled the trigger on the massive sale yesterday, just 24 hours after the publication of a highly critical report by the the Comptroller & Auditor General (C&AG) into the agency's handling of the controversial Project Eagle sale of Northern Ireland loans. A Nama insider said the sale had been in the works but indicated the timing would signal 'business as usual' at the agency which still has a vast portfolio of loans to sell off or work out over its remaining three years. Last night, a spokesman for Nama confirmed the so-called Project Gem portfolio of hundreds of property loans had been launched for sale, but said it had been planned for some time. "This project has been scheduled for some time. We have an important job of work to do and our focus continues to be to secure the maximum return for the taxpayer," the spokesman said. But the move is likely to be seen by some as Nama's effort to shrug off criticism surrounding its Northern Ireland loans. Project Gem is one of Nama's biggest ever sales and its scale means it will be targeted at only the biggest global investment funds. The huge portfolio of predominantly commercial mortgage loans is secured by 392 properties.
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PROVIDENCE RESOURCES SET TO DRILL PORCUPINE BASIN BY NEXT JUNE - Providence Resources is eyeing a start date of next June for drilling at its Druid oil prospect in the Porcupine Basin off the south-west coast.
Independent studies have suggested the presence of nearly 5 billion barrels of oil, on a combined basis, across Druid and the nearby Drombeg prospect, which is also controlled by Providence. The Tony O’Reilly Jr-fronted exploration company said it has opened a tender process for firm to provide the drill rig equipment and expects to have a deal in place before the end of the year, says the Irish Examiner. Providence has an 80% controlling stake in Druid, with London-based Sosina Exploration its 20% junior partner. While a recent $70m (€62m) fundraising, via a share sale, presented Providence the clout to drill at Druid itself (as well as to pay off legacy legal costs and debt), it could still opt to bring on board a development partner. To that end, the company yesterday said that the farm-out process, launched earlier this year regarding the Porcupine Basin assets has “garnered very good industry interest”.
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STIMULUS FEARS DRAG $1 TRILLION OF BONDS BACK TO POSITIVE YIELDS - The rupturing of the summer calm in markets over the last week has swept more than $1 trillion of sovereign and corporate bonds back into positive yielding territory, as investors question the future of central bank stimulus.
The value of debt trading with a yield below zero has fallen to $12.6 trillion in the last week, according to data from Tradeweb, snapping the pattern of the last few months in which yields have touched record lows. German 10-year bunds - the benchmark for debt in the eurozone - have been dragged into positive territory for the first time since July, with the yields rising to 0.04%, alongside a climb in yields in the US and Japan. Yields rise as bond prices fall. Despite the European Central Bank and the Bank of Japan pursuing vast bond-buying programmes in an effort to ignite inflation and economic growth, there was concern all summer over the scale of the rally in fixed-income. That erupted late last week when the ECB failed to announce an extension to its programme and several policymakers at the Federal Reserve signalled the US central bank could raise rates next week.
