In late 2014 it was announced that Cerberus had purchased Ulster Bank’s giant non-performing Project Aran loan book. Cerberus paid £1.1bn for Project Aran which has an unpaid loan balance of c£6bn. The transaction completed in the first quarter of this year and Cerberus and Cerberus Capital management have started to work away.
Project Aran consists of 6,200 loans and 5,400 properties with 75% of the loan balance secured in Republic of Ireland and 20% in Northern Ireland, incredibly 90% of this loan book is in default.
Royal Bank of Scotland stated, “The transaction, which represents RWA equivalent of c£1.2bn as at 30 September 2014, is part of the continued reduction of assets in its RBS Capital Resolution division and is in line with the bank’s plan to strengthen its capital position and reduce higher risk exposures.” Perhaps they should have said, we have no means of resolving this debt on behalf of the Bank’s stakeholders and borrowers!
In recent days Cerberus have agreed to purchase another Ulster Bank Portfolio known as Project Rathlin. The transaction involves a purchase price of £205mn with the portfolio valued at £1.4bn. This purchase falls in line with the Banks continuing efforts to reduce assets and high risk exposure. Project Rathlin has properties across Northern Ireland including substantial defaulted loans and well know properties in Belfast.
It is understood Cerberus are dealing with the highest loan values and that everything will be for sale. It is clear Cerberus are looking for a return on their investment and have set a time frame for 2 ½ years, which is tight given the substantial size of the Project Aran book. Given the tight time frame assets will be sold off a lower price and a typical sale in possession means a sale price of c60% of market value or even less.
Cerberus and Ulsterbank- Loan sales-
Cerberus Capital Management will manage facilities and some Ulster Bank staff have moved across to this department.
After a slow start, Bell & Company understand debtors in Project Aran will soon be receiving relevant letters from Cerberus and those in Project Rathlin further down the line. This will hopefully bring a resolution to this disastrous and long standing loan book.
Call Bell & Company today on 02890 517 047 to discuss your position with Ulster Bank and/or Cerberus. We have an excellent relationship with both the Bank and Cerberus and can work with you to a solution.
Terry Bell – Director