Grainger takes action to recoup Clifden shortfall

10th Mar 2015 07:10

Residential property owner and manager Grainger has taken action to attempt to recover monies owed from a recent disposal.Grainger, which sold Equity Release Increments Limited (ERIL) to Clifden Holdings in January, has appointed administrators at the company to which it sold the portfolio and agreed to buy back ERIL equity.As announced in Grainger's trading update in early February, the firm was still owed a £35m deferred consideration payment as Clifden has been unable to securitise the portfolio, with the payment still not been received as of Tuesday.As a result and after talks with Clifden to try to assess its strategy and financial position, Grainger exercised its right to liquidate the value on optional early termination of certain interest rate caps traded by Clifden but on liquidation the counterparty contested that they had zero value leading Grainger to appoint administrators to exercise its right to re-acquire the shares of ERIL.Grainger said that this was, on balance, the most appropriate course of action, with ERIL estimated to have a net asset value of ERIL, excluding sums owed to Grainger, in the region of £21m. "Accordingly, Grainger yesterday appointed two partners from Ernst & Young as administrators of Clifden and agreed to re-acquire the shares of ERIL, subject to FCA consent," it said, adding that legal proceedings may follow.