Following on from the feature article on algarvedailynews.com: ‘Espírito Santo clan fights to keep control of Comporta Estate - whatever it takes,’ rumours now are rife in Lisbon that, as predicted, a bid has been entered for one of the companies that controls the Comporta estate – a bid that is deliberately low and one, that under the company articles, can be matched by the existing family shareholders to get the estate back under Espírito Santo family control at a rock bottom price.
Inexplicably, on September 16, 2016, the Luxembourg administrator announced Rioforte’s shareholding in the two Comporta estate companies had been released for sale.
Rioforte Investments had applied to the Central Department of Investigation and Penal Action (DCIAP) to release Herdade de Comporta’s two controlling companies from the asset freeze instigated by the Portuguese State.
One of the barred 'outsider' bidders is the US financier Asher Edelman and the US investment fund, Armory Merchant in a sale process being handled by clan member José Maria Ricciardi who now heads up the Chinese bank, Haitong.
We contacted Mr Edelman at his Manhattan office to ask what he knew of the immediate future for the Comporta estate and what he knew of the alleged bid.
AE - "I do not know the level of any bids made in the first round. I have heard that someone (a group) close to the Rio Forte management and other family members has been granted the right to the second round of bidding. I have heard various names of Salgado family members and friends of the deposed management who seem to be involved and in contact with shareholders of the Fund."
Ed - That is quite an observation. Do you know exactly who is involved?
AE - "Not for sure. We are investigating and when I am certain of the players I will take appropriate action."
Ed - As I recall you and Armory Merchant were rejected as bidders for the Fund because you had relationships with a number of the shareholders. Is it really the case that the group you are referring to has similar relationships and is utilising them? If so, what do you intend to do about it?
AE - "Yes, we were rejected, ostensibly due to our friendship with stakeholders – some of whom had asked us to assist in saving Comporta from massive development which most new buyers might have been (might be) contemplating. That objective has always been utmost in our minds. We believe Comporta to be the premier beach resort in Europe. It is not a massive commercialised zone. What will we do if we find that while we were rejected for our relationships another group was accepted – one who had shareholder relationships? We haven’t yet decided but there are two likely courses of action. One, to team up with shareholders to exercise the right of first refusal it is believed stakeholders have, or two, take legal action to block a deal preferential to Rio Forte management."
Ed - Do you believe there is a “right of first refusal” to shareholders?
AE - "We have reviewed the somewhat ancient documents and it appears that such a right exists, though I would not bet the Luxembourg Trustees would interpret the document the same way."
Ed - You mention the Luxembourg Trustees, are you implying anything about their relationship with Rio Forte management?
AE - "We have seen some remarkable judgement calls on the part of the Luxembourg trustees, many of which lead one to believe they hold a certain view as to who should end up with their approval."
Ed - How will you counter the Trustee relationships and chosen course if you are right about where they stand?
AE - "We are considering legal action in the United States where the courts won’t be influenced by the dances of Rio Forte management and friends, nor by the Luxembourg Trustees. Haitong has offered the package widely, including to American investors so the American venue will have traction. Of course this is getting way ahead of where we are now. We expect, given the circumstances, that Haitong should reach out to us and invite us back into the bidding. That would be fair and the competition will certainly benefit the creditors of Rio Forte as the price will be a competitive one rather than a “cozy” arrangement for friends of the court."
Ed - Has Armory Merchant made a bid for either or both of the companies that control Comporta, or as the two companies being sold separately, has this blocked any sensible ‘market price’ offer?
AE - "Yes, we have made two bids for the Agricultural Company. Both were ignored by Haitong, Rio Forte, the Trustees, and the Luxembourg court. We have not made a formal bid for the 'Fund' as it carries more debt than the property is worth and a myriad of poisonous deals both intercompany and extra to the company. The two companies need to be put together to survive. The 'Fund' as it is structured now will be a money pit, which will not see cash flow for at least eight years and will require about €400 million to purchase, pay debt, and complete the projects. We would look to owning both entities and remerging them - the only way to succeed."
Ed - Have there been other obstacles put in your way to making a bid?
AE - "Endless, including being excluded from the bidding."
Ed - Can the administrator in Luxembourg stop any ‘fixed’ sale and reset the rules?
AE - "Yes, or one can find a non-corrupted legal system in which to litigate issues."
Ed - "How does Ricardo Salgado fit into to all of this, or is he out of the picture?
AE - "I have no idea if Ricardo Salgado plays an active role in this process. He seems to be free and in control of his destiny. I can’t see any serious opposition to Salgado that is meaningful. He seems to operate as he sees fit at this stage."
José Maria Ricciardi with Ricardo Salgado
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One thing is clear, the old style way of doing business in Portugal, the use of friends, the peddling of influence and the ability to avoid the law if one is of the elite, is ending.
This Comporta case, like many others, lays open the methods and clan connections that need to be upicked and challenged.
Portugal's struggling economy has seen many high-profile business failures where the common thread has been a business elite operating above the law and linked to complicit banks, but both parties now are in trouble and open to inspection and prosecution.
The extended Espírito Santo family was once all-powerful under the corrupt and corrupting purview of Ricardo Salgado but this empire lies in tatters and those clan members imagining they can continue to behave like they used to, as is the case here at the Comporta estate, now have an ever-alert media and the judiciary to deal with.
Ed
Carloto Beirão da Veiga, administrator of the Comporta Estate
See also: Espírito Santo clan fights to keep control of Comporta Estate - whatever it takes