Icelandic exposure chills the Tchenguiz
Vincent Tchenguiz is battling to take back his property empire from the ashes of Kaupthing. James Moore reports
Tuesday 15 February 2011
In their heyday they were corporate raiders par excellence. Wherever there was trouble brewing – usually if property were involved – it seemed that up would pop one or the other (or both) of the Tchenguiz brothers with a plan. To add to their impressive fortunes.
Sainsbury's, the retailer, Mitchells & Butlers, the pub company, La Tasca, all were among companies in receipt of their attentions.
And, to be fair, it is not as if they can't boast of some notable wins (Robert, for example, cashed in a big stake in Somerfield when the retailer was taken over by the Co-operative group) together with playboy lifestyles, although Robert, younger, smoother, and with a fondness for snappy dressing, has slowed down since his marriage.
They also have all the obligatory toys of the super wealthy, the yachts, the multiple mansions, the flash cars and (in the case of Vincent, the older of the pair) the photographs of him surrounded by bevies of beautiful women. They have rarely been out of the spotlight.
But they never quite had it all their own way – the Sainsbury family, for example, scuppered an attempt to force a takeover of J Sainsbury, the eponymous supermarket group in which they still have a considerable interest, if not control, leaving Robert Tchenguiz nursing a huge loss when he eventually sold the massive stake he had built up via contracts for difference. And the reason he had to sell was Kaupthing.
The collapse of the Icelandic bank, which had been closely associated with the brothers, providing finance for many of their ventures, created an earthquake from which after-shocks are still periodically rumbling. One that is causing ructions through the courts at the moment is where the brothers stand as creditors and what chance they have of securing some – or even all – of the hundreds of millions of pounds in assets held by the bank as collateral against loans that were seized when the roof fell in.
Getting a handle on the business interests of people like the Tchenguiz brothers is never easy. They tend to operate through webs of interconnected companies, registered in a variety of jurisdictions (although for the purposes of tax efficiency).
There are two trusts with claims against Kaupthing: The Tchenguiz Discretionary Trust (read Robert) and the Tchenguiz Family Trust (read Vincent). The really interesting case at the moment involves the Family Trust, which is currently waiting on a decision which could yet see a revival in Vincent's fortunes.
Currently, a variety of lending banks exercise financial control in the shares of a large real estate portfolio owned by the Tchenguiz Family Trust. They had been placed with Kaupthing as collateral in an attempt to prevent the bank calling in a £1.8bn loan to Robert. The manoeuvre ultimately proved to be in vain because the loan was finally called in when the bank collapsed in October 2008. As was the collateral.
The upshot of all this is that a substantial part of Vincent's multibillion pound property empire is no longer under his control. He is still managing it, but he can't do anything much with it. The same is true of his ownership of the controversial property management company Peverel. Last night it issued a statement saying: "The Peverel Group are owned by the Tchenguiz Family Trust." Which is still true in one sense.
However, it is understood that the ultimate financial control of the stake is in the hands of Vincent Tchenguiz's lending banks.
Does this mean the end of Vincent Tchenguiz as a force in the City, then? Well, don't expect to see either brother's name popping up on share registers, or (more typically) being declared as having an interest in company X through contracts for difference for now.
But the trouble for Kaupthing creditors is this: the value of the shares its liquidators would like to get their hands on come with a sting in the tail. If control changes, default clauses are triggered and the whole thing gets even more murky.
The court's decision is expected within the next few days on what happens to the collateral, which clients of the Peverel Group might welcome – at least they would know who they are aiming their guns at. There is an action group set up by leasehold clients of the company who have levelled a string of criticisms about its business practices.
Peverel maintained in a statement that "as a market leader, we often bear the brunt of criticism for things that not only affect the whole property management industry, but are beyond our control" and "like many organisations, The Peverel Group receives comments, complaints and queries via online websites, forums and blogs." What is certainly clear is that whatever decision the court makes, the Tchenguiz name is unlikely to remain in the shadows for too long.
The rise and rise of the Tchenguiz family
* The rise of the Tchenguiz brothers to London's financial elite is quite a story. The family grew up in Iran, where their father Victor, an Iraqi jew, had fled to escape persecution in 1948.
The three Tchenguiz children, Vincent, Robert and younger sister Lisa, attended the American school in the Iranian capital Iran, where their passion for making money was first made manifest.
Vincent arrived in London in 1984, joining Prudential Bache, where he traded futures for the firm. At the same time Robert, four years his junior, was building a property empire in the city with the encouragement of their father. Vincent eventually packed in his day job to join his brother and their company, Rotch, bought an astonishing £4bn of property, largely through debt financing, becoming one of the most aggressive buyers in town. While the company was wound down as the brothers pursued divergent interests, they still have strong business links and talk most days. Meanwhile their sister, Lisa, married Vivian Imerman, the food and drinks magnate. The marriage was ultimately to prove a failure and resulted in one of the most spectacular divorce battles seen in London as she fought for a greater share of his wealth than had been originally specified in a pre-nuptial agreement (his fortune had increased substantially during the years of their marriage).
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