View from Dublin: why Quinn Industrial Holdings was a smart buy
The consortium that bought Sean Quinn's former cement and plastics operations got a real bargain from the receivers back in 2014.
Quinn Industrial Holdings is run by a local consortium of businessmen and former Quinn Group executives but it is majority owned by some pretty sharp US hedge funds.
The local group led by businessmen John McCartin, Ernie Fisher and John Bosco O'Hagan bought this part of the former Quinn operations for €98m back in December 2014.
During the week the group put out summary financial statements which showed that it grew pre-tax profits last year by 59% to €10.8m.
This was on the back of a 7% increase in turnover to €209m. Operating profits shot up a massive 48% to over €14m.
These are headline figures but they show what a solid business it is, provided it can ride the benefits of economic growth in Ireland without being detrimentally affected by Brexit on either side of the border or the Irish Sea.
The group is exporting across to England from Warrenpoint Harbour.
So how much is Quinn Industrial Holdings worth, given that it was bought for €98m just over three years ago?
According to QIH's full accounts for 2015 and 2016, its tangible assets were valued at €113m. But it booked around €30m of "negative goodwill".
This is defined as arising "on an acquirer's financial statements when the price paid for an acquisition is less than the fair value of its net tangible assets".
Negative goodwill implies a bargain purchase and the acquirer immediately records an extraordinary gain on its income statement.
The owners may have got it at a very good price, but it takes know-how, and presumably local support, to make these profit numbers. In its first year of new ownership, QIH managed to slice €9m off its administrative bill while also hiring an extra 30 staff. It now employs 800 people.
It has made €21.6m in pre-tax profits in the first three years of operations under new management. But the big winners here are the hedge funds who bought around 80% of the business and funded the deal - Brigade Capital, Contrarian Capital and Silver Point Capital.
QIH had borrowings of around €102m at the end of 2016 and was paying interest to these financiers of 10% a year on €59m of it. Its lenders had received €16m in interest in the first two years of ownership.
QIH is confident of growing further and is investing and hiring all the time. It is spending another €3m on a fleet of 33 new cement trucks. The hedge funds can continue to get their 10% return on loan notes right up until 2024. Who knows what the business could be worth by then?
Meanwhile, if you want to skip the queue to get on board a low-cost flight more quickly, you have to pay a little more.
Is IAG's Willie Walsh trying to board low-cost long haul success without paying anything extra with his interest in Norwegian? The chief executive of IAG has never lacked ambition when it comes to expanding the group. Having put BA together with Iberia, facing down unions in Spain, he has added Vueling and Aer Lingus to the IAG group.
At first glance his timing for a move on Norwegian Air looks perfect. The group has been enjoying passenger number growth, but its share price has fallen because of concerns about the strength of its balance sheet in the face of its expansion plans.
Walsh landed IAG on the Norwegian share register by buying a 4% stake and then went on to clearly indicate his interest in a bid, even though talks have not yet taken place.
Perhaps Mr Walsh believes he can take a fast track to low-cost long-haul with Norwegian and still snap up Europe's third-biggest low-cost airline at the same time for a modest price.