One of Ireland's largest housebuilders - with property development interests in England and much of the world - has collapsed. The Belfast-based Taggart Holdings was placed in administration at the request of its two largest lenders, the Bank of Ireland and Ulster Bank (part of the Royal Bank of Scotland).
Excessive debts
Taggart Holdings had expanded quickly in recent years, with ambitions of further growth. However, it failed to predict the property downturn, which meant the company was unable to sell new homes at anticipated prices. It had already been forced to halt new building projects on its vast property landbank. As a result, the company was unable to service its high levels of debt, which are estimated at £132m or more.
The company was caused further problems by the declining value of sterling against the euro: many of the properties and development sites it owned were situated in the border areas of the Irish Republic, which would have been expected to be attractive to buyers from Northern Ireland. However, as the euro strengthened against the pound, the properties became less financially attractive.
Taggart had publicly recognised the scale of the challenge in turning round its performance, had cut its staff from 150 to 15 and had appointed advisors to assist with restructuring. The company's property assets had been valued at £500m last year - but are likely to be worth much less than this in the current economic environment. Thousands of homes were planned to be built on the nearly 30 sites held by the company.
Chain of investments
Planned property developments in Northern Ireland, the Irish Republic, Luxembourg, Eastern Europe, New Zealand and the US could all be put in jeopardy. However, the company tried to reassure investors and potential homebuyers that it intended to proceed with schemes in Luxembourg and Dublin.
Taggart's UK subsidiary, Cecil M. Yuill - which was purchased only last year - was almost immediately purchased by the company's directors with the backing of Bank of Scotland (Ireland).
Garth Calow and Rob Birchall from PricewaterhouseCoopers have been appointed as administrators. Calow said: "We are working closely with the directors of the company to clarify the assets, including land, buildings and properties - both competed and part-built - that fall within the control of the Joint Administrators (for the NI based companies) and Joint Receivers (for the RoI companies).
"While we are some way from developing a plan for the future operation of the businesses, I can confirm that initial speculation that this process has halted thousands of new Taggart properties worth hundreds of millions of pounds is completely without foundation. There is considerable value within the group companies and with the cooperation and support of the directors, we will seek to maximise this value over the coming weeks without adversely affecting the already difficult conditions facing the construction industry."
Rich owners
The owners of Taggart Holdings were brothers Michael and John Taggart, who were listed by the Sunday Times as among the richest men in Ireland. Michael had paid Lionel Richie and Van Morrison to play at private events.
Taggart's failure is a further sign of the crisis in housebuilding at present. Several other housebuilders have reported serious trading difficulties this year. Taylor Wimpey reported a trading loss during the summer and is currently struggling to refinance debts. Barratt has reported a much reduced profit. Bovis has laid off large numbers of staff.
One bright light has been offered by the Government, which has indicated that it is willing to invest more in housebuilding programmes to stimulate the economy. The Department of Communities and Local Government has also announced that it has agreed to use £13m from a special budget of £200m to buy unsold new properties that will now be made available for social housing.
