US investment firm Apollo buys up Arnotts’ debt

US investment firm Apollo has acquired loans secured on the Arnotts department store in Dublin following a lengthy bidding process, reports this mornings Irish Independent has learned.

The loans, which have a face value of €230m, have been bought from the liquidators of IBRC, the formerAnglo Irish Bank.

The Irish Independent was first to report that Apollo was set to secure the loans last Friday.

What they have bought is a portion of debt taken out by Arnotts’s previous owners to develop the shop and surrounding properties in the Henry Street area of Dublin in a scheme that was to be known as the Northern Quarter.

The remainder of the debt has already been bought by a combination of the billionaire Brown Thomas-owning Weston family and developer Noel Smyth’s Fitzwilliam Finance. They bought their share of the loans from Ulster Bank in a separate deal.

It’s believed the two debt deals value Arnotts at around €95m in total — a fraction of its price during the boom.

IBRC and Ulster Bank took control of Arnotts and a portfolio of neighbouring properties in 2010 when the lenders wrote off a separate €300m of debt in exchange for ownership of the business — squeezing out former owners.

In 2010, when the business fell into the hands of its creditors, Anglo Irish Bank was reported to control 45pc of the business, while Ulster Bank controlled 49.5pc.

With three new investors, the future of the iconic department story and its substantial property assets will be the source of intense negotiation over the coming weeks.

It is believed that the Westons, a Canadian retail dynasty with strong Irish links, want to run Arnotts under its existing name as a distinct retail brand, rather than rebrand it as a Brown Thomas store.

Apollo Global Management is a New York-based €82bn asset management firm with considerable consumer business, as well as property investment interests.

Last year the fund acquired the Irish credit card call centre and operations facility business of MBNA Europe in Carrick-on-Shannon, saving 250 jobs there.

Apollo’s European division also bought a €1.8bn portfolio of Irish commercial real estate from Bank of Scotland at the start of this year and is believed to be bidding on part of a former Sean Dunne Nama property portfolio.

“It wants to invest here and invest in Ireland and Irish businesses,” one source that has dealt with Apollo said.

The development of the originally planned €700m Northern Quarter project is thought to be unlikely.

A core part of that plan was the former Independent News and Media building on Abbey Street, but it has been sold off to Penneys owner Primark. Source: The Irish Independent.