Offers to buy the grand Espírito Santo estate ‘Herdade da Comporta’ have been rejected by the Luxembourg judge administering the insolvent Espírito Santo Property.
The judge politely referred to the bids for the estate as ‘too low’ which is bad news for those holding bonds in Espírito Santo Property that were hoping for an early repayment of at least some of their money.
The insolvency judge from the court in Luxembourg rejected the only two bids for Espírito Santo Property which holds much of the property assets of Grupo Espírito Santo including Herdade da Comporta on the Alentejo coast, the Oeiras Golf & Residence and Quinta do Peru.
The judge said that the offers, around €60 million, were far too low and he has suspended the sale process for the time being.
The two proposals, from around 60 initial enquiries, were submitted by the Cerberus Fund and by Global Reach, run by a former banker Artur Silva Fernandes.
Espírito Santo Property is subject to a Special Revitalisation Process and among its creditors are hundreds of BES customers who were mis-sold investments in BES branches, investments which turned out to be highly speculative paper in parts of an already collapsing Espírito Santo empire.
Espírito Santo Property is being managed with the help of Ana Paula Alves who as the former financial manager of collapsed Rioforte should at least have access to some inside knowledge of the legal mess at Herdade de Comporta that was created by Espírito Santo managers for whom planning laws were for other, less powerful people.
An offer of €60 million would barely have covered Espírito Santo Property's debt of €58 million but the rejection of the highest offer leaves creditors disappointed and in no better position.
The main creditors are the state which is owed €4.9 million and BCP Millennium which is owed €14 million. The remainder of the creditor are hundreds of BES customers who ended up with €23 million of bonds.
How the state let this company run up an account of €4.9 million itself is deserving of investigation as normal mortals and companies have assets seized and sold off when owning a matter of a few hundred euros.
Espírito Santo Property, unlike its sister company Rioforte, is insolvent and is dependent on the actions of the Luxembourg judge handling the case. The Special Revitalisation Process serves to keep the Portuguese state and the bank from seizing and auctioning off the real estate assets.
Herdade de Comporta, often referred to as the jewel in the Espírito Santo empire's crown, is under investigation by the Ministry of Finance after staff spotted irregularities in several buildings on the estate. The council at Alcacer do Sal stands accused of issuing illegal building permits between 2000 and 2007.
There are four houses that prosecutors want to have demolished, including the one built by Caetano Beirão da Veiga, the former president of Grupo Espirito Santo.
The Administrative Fiscal Court in Beja is aware of construction in national ecological reserve areas; pre-existing homes enhancements that tripled the footprint and have no licence, and buildings within the maritime reserve.
Construction problems in Herdade da Comporta do not stop there. An inspection undertaken in 2013 by Ministry of the Environment staff detected 12 cases that raise suspicions as they did not have correct licences or the well connected owners simply decided to build illegally without even trying to get a licence.
This may explain the low bids placed before the Luxembourg judge. The result of Espírito Santo throwing its weight around and ignoring the planning laws that everyone else must follow has been a legal tangle that may well have depressed the value of the property assets as future legal costs and fines may be payable by the new owner of the company.
1836
Rice farming began. The Herdade da Comporta was incorporated into the nem Companhia das Lezírias do Tejo e do Sado, which belonged to the Portuguese Crown.
1925
The Companhia das Lezírias sold the Herdade da Comporta to the British company The Atlantic Company, Ltd.
1955
The agricultural production and the pine forest were extended. Work began on improving basic facilities and renovating villages, building schools and housing.
1975
The estate was nationalised, and was only returned to The Atlantic Company, Ltd. between 1989 and 1991.
1991
The development of the Herdade da Comporta started with the renovation and improvement of the land and buildings so as to maintain and protect its natural, architectural and agricultural heritage.
2004
The company’s name has been changed to Herdade da Comporta - Actividades Agro Silvícolas e Turísticas, S.A. One of its goals is to develop a high-quality tourist destination and to become a model for sustainable development in Europe, while still operating as an agricultural estate and preserving its environmental and cultural heritage.
2014
The estate is owned Espírito Santo Property which seeks protection in the Luxemboug courts as Grupo Espírito Santo collapses, led by BES bank. The estate is put up for sale to the highest bidder. The Luxembourg judge rejects bids as 'too low.'
