Stories
One key aspect of The Currency’s coverage of National Broadband Ireland (NBI)’s finances last week was the fact that the company in charge of the National Broadband Plan was nearly entirely funded through expensive loans – of €100 million in capital provided by its shareholders to date, €98 million has been in the form of debt at a 12 per cent compound interest rate repayable on demand from January 9, 2024, while private investors have purchased only €2 million worth of shares in the business.
The government has insisted that these shareholders’ loans qualify as “equity” and count towards the €220 million they must invest under this category. New documents from previously unidentified NBI-related companies reveal that this is not the definition used by their own accountants and directors.
Two Irish companies with NBI chairman David McCourt as their sole director, Bradtomy Ltd and INGTRG Ltd, have now filed accounts for 2020, the year when NBI was capitalised and began operations. They both report participating in loan funding for NBI’s immediate parent Metallah Ltd, all at the same conditions as previously detailed.
Bradtomy, which is wholly owned by McCourt’s US-based firm Granahan McCourt Capital and was incorporated five days before the signature of the National Broadband Plan contract in November 2019, reported: “The Company advanced €2,678,959 in loans during the financial year. This was funded by way of an equivalent loan received from its investors.”
Meanwhile, INGTRG, a company formed in December 2019 and 60 per cent owned by Granahan McCourt Capital and 40 per cent by its US partner Tetrad Corporation, reported: “The Company advanced €5,053,812 in loans during the current financial year. This was funded by way of equity investment received from its investors.”
In the case of INGTRG, investors paid €6 million into the share premium account attached to their shareholding. That much is clear: McCourt’s companies use the word “equity” for investment in shares, but not in loans of the type used to fund NBI.
The documents uncovered by The Currency also lift a corner of the veil on another question still unanswered after two weeks of questioning journalists and politicians in the Dáil: To whom exactly does NBI owe its debt?
As we revealed last week, the US investment firm Oak Hill Advisors (OHA), which is NBI’s largest ultimate shareholder, initially advanced the majority of these loans (€52.6 million). It then reported the “transfer” of a €4.6 million tranche of this debt to an unidentified party.
None of NBI, Oak Hill Advisors or the Department have yet replied to The Currency’s questions regarding the destination of this transfer or the rationale behind it.
As NBI companies had identified this funding as “shareholders’ loans” and the only NBI shareholder not disclosing loans was a US holding company called Telecom Infr Mgmt LLC, The Currency concluded that it was the only possible owner of the missing loan tranche originated by OHA.
By uncovering the existence of Bradtomy and INGTRG, however, we are now opening another possible avenue. The two McCourt companies, whose sole assets are their 12 per cent loans owed by Metallah, form part of a parallel funding channel for part of the debt extended to NBI outside the ownership structure identified last week.
This adds complexity to the picture and will make it more difficult to follow the evolution of each investor’s interest and returns into the future. There may also be additional companies controlled by NBI’s ultimate shareholders outside its shareholding structure that have not yet been identified.
Then on July 2, 2020, David McCourt incorporated yet another company in Ireland, called Aglaea Unltd. He personally owns the majority of its shareholding, with a minority held in preference shares by Granahan McCourt Capital.
Last month, Aglae recorded a charge in favour of Bank of Ireland in relation to a debt facility the company obtained from the bank. The document shows that McCourt’s new company gave the bank security over “its rights and benefits” attached to a contract described as follows:
“Services Agreement dated 13 October 2020 as amended on or about the date of the Debenture and made between, amongst others, Telecom Infra MGMT, LLC, NBI Bidco, LLC, the Chargor [Aglae Unltd], David McCourt and Tetrad Corporation.”
As detailed above, Telecom Infra Mgmt and Tetrad Corporation are shareholders in NBI and David McCourt is its chairman. NBI Bidco LLC is the US company controlled by McCourt and incorporated in the US state of Delaware one week before the National Broadband Plan contract was signed, which has since billed NBI €32.7 million for the costs incurred by investors in preparing and winning the contract in previous years.
All the companies named by Aglae in its charge particulars have been involved in the National Broadband Plan and, through Aglae, McCourt is now borrowing from Bank of Ireland against the value of his business with them.
Further reading
We don’t know what’s going on at NBI. We should, because we are paying for it
