Former Anglo Irish Bank chairman Sean FitzPatrick stands to lose more than €135,000 in annual income as a result of Anglo's decision last week to suspend all future coupon (interest) payments on most of its junior debt in advance of a buyback.
FitzPatrick, who resigned in December after it emerged he concealed millions in directors' loans, including his own, still holds 6.3 million units in a €750m floating-rate Anglo bond issue which he acquired in 2008. At current rates, that investment should be paying him €135,828 per annum.
Now that the EU Commission has instructed Anglo to cease payments as a condition of its €4bn recapitalisation, FitzPatrick will not see any more of that money. But he will get a substantial portion of his investment back when the bank repurchases the €3.2bn in affected securities at a discount to help boost its capital reserves.
Fitzpatrick bought the debt units in two tranches – a million units at €0.86 per unit and 5.3 million at €0.875 per unit – costing roughly €5.5m. He has taken a near €2m paper loss on the investment already, as the debt is trading at just over 53 cent in the euro.
FitzPatrick was also an equity investor in Anglo and that stake was wipe d out by the nationalisation in January.