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June 28th 2006

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Shareholders vote to allow
Bennett acquire mart site

And so, the final round-up. Once more the ballroom of the Millpark Hotel was the venue where approx 140 shareholders turned up to vote on ‘an offer by Bennett Construction Ltd to acquire the mart society’s premises at Milltown and provide a new premises at the Tullyearl roundabout and, should the members present so decide, vote on acceptance or rejection of such offer’.
The meeting opened by Chairman John Kelly asking for a show of hands as to whether the press should be allowed report on the proceedings. It was carried that they should.
Mart secretary, Shay Carbin, then summarized events since the last meeting. “In the interim the committee has met numerous times with Bennett Construction and, in particular, with its architect Patrick Newell to discuss the design of the new mart. The concept he has come up with should be very suitable for us here in Donegal Town”.
The Bennett team were then called in to make its presentation. It consisted of solicitor James Campbell, Paul Magee, Project Manager, John White; and architect Patrick Newell.
John White first ran through other projects around the country that Bennetts have been involved in. He then gave a detailed description of the new site at Tullyearl, the buildings it would contain and negotiations with various bodies. He explained how his company came back into the picture.
“In 2004, we weren’t successful on the day but, in the interim, we were invited back by the committee to make another proposal. As part of that proposal, we were conferred with preferred status. We have had a lot of discussions with the planners and engineers in Donegal Co.Council – we have also had discussions with the NRA in relation to access onto the Tullyearl roundabout.” declared Mr. White.
He went on “We will also extend any tax advice to make the offer even better. We would hope that, at the end of this, everything being acceptable to yourselves, we could reach formal agreement whereby we would take the design and the delivery of the new mart forward for a formal agreement and put a planning application into Donegal Co. Council.”
Mr White continued “The new mart site itself is seven acres adjoining the Tullyearl roundabout, previously owned by Thomas Og McGarrigle. The land is paid for, title secured, so we (Bennetts) are in complete ownership of that land. We still need to do a lot of work in terms of consultancy, we need to get traffic impact assessments, provide safety audits and employ environmental impact statements. When we have completed these discussions we will get into the hard part of actually putting the proposals forward. The planning application will take about nine months to put before Donegal Co. Council. The construction works programme will take in the region of twelve months.”
Referring to the old mart, Mr White said “On the existing mart site we have agreed that nothing will take place until the planning applications for the new mart have been lodged with Donegal Co. Council. In addition, no works of any kind will take place on that site until such time as planning has been granted on the new mart. That means that you get the keys of the new mart before the existing mart is handed over. That site will then become part of a masterplan for Donegal Town.”
Architect Pat Newell then went through the technical details of the site and buildings, including the various working areas, viewing platform, parking sites, offices, kitchen and canteen, lorry washing area and pens. The main mart area itself will be 55m x 88m on the seven acre site.
Then came the crucial part of the meeting – the Bennett offer. John White took the microphone again and laid it out. “Bennett will build the new mart on the proposed site of seven acres adjoining the Tullyearl roundabout. We will do all the design work and lead the discussions with the planners and the NRA towards getting permission for the site. The mart committee will still be involved with the design before it goes in for actual planning. €3 million is the cash offer on top of design and building the new mart. We’ve come a bit from where we were before – time has passed. On top of that there is a possibility of grant aid from the Department of Agriculture. What we propose to do is to share out any grant aid”. Mr White said.
He continued, “So to sum up – we have secured the new mart site – we have positive feed-back from the planners and the NRA. We take responsibility for building the new mart. The cash offer on top of that will be €3 million. In addition to that any grant aid that we will get from the Department of Agriculture will be shared. There will be a masterplan approach to the existing mart site which will include adjoining sites. Bennetts have got a strong track record – and we have the financial strength to deliver exactly what we proposed here tonight”.
There then was a short question and answer session between the Bennett team and the floor, with Brownhall man John Hamilton first on his feet to ask the exact size of the proposed new mart.
Patrick Newell answered “5,000 sq metres – we’ve worked on the basis of it taking between 800 and 1,000 cattle”.
John Cassidy – ‘In your pre-planning discussion with Donegal Co. Council, have you touched at all on the subject of sales times? In other words, if this plan was to come to fruition would there be restrictions on times coming in and going out?”
John White intimated that his company had carried out discussions with the relevant bodies and there would be no problem with that.
Radine Hamilton: “The last time you were offering a non-refundable deposit – this time you are not?”
John White: “The reason we are not offering a non-refundable deposit is because of the amount of money we will be spending on getting the mart to planning. This could cost anything up to €250,000.”
Eric Morrow: “You mentioned in your preamble that the site was designated – for what is it designated? If you are successful in getting a grant for construction of the new mart, in what proportion will it be divided between the mart and yourselves?”
John White: “The intention is that it would be 50:50. There have been grants in the past at a level of up to 50% of the capital cost. If you take this cost to be €4 million, that would mean a million to ourselves towards the capital cost and a million to the mart - which will be on top of the €3 million. The designation has not changed – it is designated agriculture - the land would only be re-designated on approval of planning permission”
Seamus Gallagher: “Is €3 million not a ridiculous valuation for the existing mart. €3 million for 5 acres in the middle of town.”
Chairman John Kelly “Henry Kee was the person who valued the mart and it was valued at €3 million.”
John White: The capital cost of the new mart is €4 million, there is also going to be fees on top of that, also contributions to the NRA, plus planning fees. On top of that there’s tax. You’re not far of €8.5 million.”
Cathal McGinty: “Mart should go to highest bidder in an open auction.”
Mart Secretary, Shay Carbin, then went back over the history of previous votes to explain how Bennett came to be sole bidder. “The mart committee has had many meetings with Mr Newell, who has been very co-operative. He has taken on board all our suggestions – the unloading bays, the rings – everything like that has been agreed. We, as a committee, have looked at it and accepted that it is a very good mart - and what we have to decide here tonight is exactly what you, the shareholders, asked us to do – bring you back an agreement and a deal with Bennett Construction. Tonight it is up to you to decide if you want to accept this offer from Bennett’s. And if you decide to accept, we, the committee, along with our legal advisor Mr. Gallagher will sit down and negotiate a contract that will protect Donegal Mart. And we will make sure to get everything Bennett is promising to give us.” Mr. Carbin declared.
Bernard McGlinchey: “Is the €3 million for the mart or for the shareholders?”
John White: “For the shareholders.”
Shay Carbin: “The €3 million will be paid over to the Donegal Co-Op Livestock Mart - and the shareholders own this mart.”
Auditor to the mart Joe Carolan then spoke “Tax is going to be a big issue in this deal. As it sits at the minute, it appears to me that the Revenue might be claiming a big chunk. But you are entitled to tax planning to minimise your liability. You are, at the moment, disposing of a mart at a price of up to €7 million and I suspect they (Revenue) will be looking for 20% of it. You are purchasing a new premises. To me the land should be purchased in trust by Bennetts”, said Mr. Carolan.
He went on to explain how this could save the shareholders a certain amount of stamp-duty and concluded by saying if Bennetts held the land in trust and transferred the land over, then the mart would only pay 9% on the land as opposed to the building as well.
Mr. Carolan went on, “There is also the issue of what you, the shareholders, decide to do with the €3 million. In an ideal world, I would tell you to sell your shares to Bennetts. You need good tax planning and good tax advice on this – we would need to sit down to plan an appropriate way to minimise the tax liability to the mart and its members.”
John White: “Whichever way it goes, there is going to be tax implications which is why we said we would offer tax advice. There’s a couple of ways around this and we will go through that. No matter what deal you do when there is a cash offer, there will be tax.”
Eunan Curristan: “Has the committee sought, or received, any other proposals and, if not, why not?”
Before the top table answered this and after a question from Dessie Graham clarifying boundaries, the Bennett team left the room.
Then, in answer to Mr Curristan’s question, Shay Carbin outlined what had transpired since the last meeting (on November 24th 2005). “We went through our meeting and it was decided to enter negotiations with Bennett Construction. We had already met with Bennett to discuss their position on November 11th. On December 14th, Daniel Gallagher came up to my house to deliver a letter with a proposal signed by 24 members to have a Special General Meeting. I told Daniel on the day that he delivered the letter that I didn’t think we were in a position as a committee to negotiate with another developer when we were still in the process of carrying out the proposal of the meeting that was voted for on November 24th. We felt that until we had carried out your instructions we couldn’t enter into negotiations with another developer. I wrote to Daniel Gallagher on December 19th and outlined the committee’s position – the committee had met on December 15th” said Mr Carbin.
He went on “We consulted with our solicitor and decided that we should investigate Daniel Gallagher’s offer further. We wrote to Mr. Gallagher’s solicitor asking for certain information in relation to his offer. We had questions relating to title to site, his ability to financially back this proposal, and sought a copy of the planning permission – he was offering a site that had full planning.
“The letter we received from Daniel’s solicitor was totally unsatisfactory in regard to the questions asked – and to some of the questions we got no answers at all. We wrote back to Daniel Gallagher’s solicitors and told them that, for example, he hadn’t supplied us with a copy of the planning permission of the site and there were no satisfactory answers to any of the other questions. We still haven’t received any word back from Daniel’s solicitors”, Mr Carbin declared.
He concluded “Meanwhile we were meeting with Bennett’s people and had signed off on an agreement on the design of the mart and we then proceeded to call this Special General Meeting to allow the shareholders to finish off the proposal you had voted for on November 24th. So that’s our position on the other offer that was made. That’s the answer to that, Eunan.”
Eunan Curristan: Did you seek other proposals and, if not, why not?
Shay Carbin: Did we seek other proposals – No.
Eunan: Why?
Shay: “For the simply reason that the shareholders on the 24th November instructed the committee to ‘discuss and conclude’ the offer for the construction of a new mart as proposed by Bennett Construction at a site already considered by the mart shareholders. That’s the position Eunan, you can ask the same question over and over again, and I’ll give you the same answer.”
Daniel Gallagher: “I had a proposal for the requisition of a meeting with the correct number of signatories. John Kelly gave me his word that my proposal would be dealt with. To this date it hasn’t been. You are questioning my financial ability to fund it. I have a good credibility around the area and everywhere else I have done business and I am putting €1 million non-refundable deposit down. Now if I wasn’t going to finish the job, I’m not that big of a fool to walk away from a million euro. As far as planning permission is concerned, it’s a public document and you already know the type and specification of the mart. It has been agreed before by yourselves. I don’t want you sitting up there rubbishing my offer – rubbishing my credibility as well.”
Shay Carbin: “I haven’t rubbished your offer. We did our best to investigate your offer and to negotiate. We contacted your solicitor and didn’t receive a satisfactory reply. The proposal I got from you to hold a meeting – we were already in the process of carrying out the instructions of the shareholders to meet with Bennett Construction and also to come back to those shareholders when we had finished this negotiation. We couldn’t be in the middle of that and hold another Special General Meeting and put another proposal to the floor.
Mr. Tyndall recommended that the committee adjourn the meeting and when the shareholders met again all offers would be on the table. He said he felt the members had been railroaded into a decision at the November meeting.
Shay Carbin: “This is a special meeting and the only item on the agenda that can be discussed is the item for which the meeting was called - and this meeting has been called to vote on the proposal from Bennett Construction. We have done our best as a committee to carry out the instructions of the shareholders.
Eunan Curristan: If this proposal is accepted by the shareholders, does that mean that the committee is not going to be seeking any other proposals?
Shay: “Yes!”
John Hamilton: “You are rubbishing the rules of the Society, why will you not let Bennett have some competition?”
Shay: “This is an official meeting of all the shareholders. Bennett has presented its offer and I think the best thing we can do for the benefit of all is have the vote.”
Eric Morrow and Eamon Brogan were appointed tellers with an independent scrutineer. The vote was taken and it resulted in a majority in favour of the Bennett offer 99 to 37.

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