Banks wary of Goodman

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GOODMAN International, the Irish beef processor run by Larry Goodman, has reached a critical point in talks to arrange a debt rescheduling.

One source said: 'There is a core of banks that are working towards a solution, but some of the smaller ones are getting windy.'

The 33 banks agreed last year to restructure the meat empire's pounds 512m debt for repayment over seven years.

Goodman failed to meet a pounds 134m capital repayment in full in March, however, although it has kept up to date with interest payments.

A spokesman for the group refused to comment other than to say that Goodman had a 'good working relationship' with its banks.

It is hoped that the banks will have agreed on a new schedule for repayments within the next fortnight.

The need for a rescheduling has become apparent as targets for capital repayment and profits set in the restructuring have not been met.

One favoured solution is to increase the non-interest-bearing proportion of outstanding debts.

Goodman International's trading profits for 1991 are understood to have fallen to between pounds 18m and pounds 20m from pounds 24.5m in the year to December 1990.

Analysts in Dublin said the fall in profits was due to difficult conditions for beef exporters.

The Gulf war hit beef markets in Iraq and the Middle East and the BSE ('mad cow disease') scare depressed markets elsewhere. In addition, an increase in cattle prices squeezed margins.

Asset disposals have been slowed down by difficult market conditions. But Goodman is understood to have raised more than pounds 50m from asset sales over the past 12 months.

The sale of the group's 68 per cent stake in Food Industries raised pounds 38m and property disposals have fetched more than pounds 20m.

Goodman International's misfortunes struck when Iraq invaded Kuwait in August 1990. Iraq owed the beef processor pounds 168m.

The beef group would have been protected but for the withdrawal of government credit insurance on exports to Iraq in 1989. The withdrawal followed what were described as 'statistical discrepancies'.

The Dail was recalled from its summer recess and passed legislation to give the company temporary protection from its creditors.

A collapse of the Goodman empire would have had serious implications for the Irish economy. In 1991, it reportedly controlled 40 per cent of the annual cattle 'kill' in Ireland. At the time beef accounted for 10 per cent of Ireland's gross domestic product and 7 per cent of exports.

The fresh financial uncertainty comes when Mr Goodman is facing claims from Des O'Malley, Dublin's industry minister, that his company sought millions in export insurance for beef that did not originate from Ireland.

He is also said to have received preferential treatment from Charles Haughey, the then Prime Minister.

(Photograph omitted)

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