The Irish government has repaid a loan worth $18mn to billionaire Mikhail Fridman’s Alfa Group to help fund the recovery of assets in Russia and Ukraine previously owned by tycoon Sean Quinn, bne IntelliNews can reveal.

Alfa advanced “the limited recourse preferred loan” to an Irish government entity after a joint venture between Fridman’s Alfa A1 unit and the IBRC, the Irish state agency, was wound up. Filings made this month with UK Companies House show the outstanding balance of the loan has been repaid, while the disclosures indicate that the Irish government may be about to turn off the taps in the expensive pursuit and attempted resale of the assets.

Quinn, once Ireland’s richest man, had a portfolio of office blocks, shopping malls and warehouses across Russia and Ukraine. The investments, which were once valued at €500mn, have tumbled to as a little as €100mn due to mismanagement, a collapse in commodity prices and sanctions imposed on Russia due to its involvement in the Ukraine conflict.

Philip McDonagh, Ireland’s ambassador in Moscow at the time of A1’s appointment, said recovery of the assets was of “paramount importance to Ireland” and progress could improve trade ties with Russia.

Billionaire Fridman’s A1 exited the joint venture last year after struggling to sell any of the assets in the teeth of Russia’s recession. A1 is believed to have sold only one asset, a DIY hypermarket in Yekaterinburg, as the Russian economy tumbled in the wake of sanctions and a collapse in energy prices.

Filings for the Irish state-controlled entity involved with Alfa indicates that $24mn of outstanding debt claims was recovered in the 18 months to June 30, 2016. Some of those proceeds were used to pay off the preferred loan taken from Alfa.

The net asset value of the entity, known as QIPGR, stands at $6.2mn after making net impairment provisions against outstanding debt claims of $11.5mn in the period.

The asset value of the vehicle was “substantially reduced” following the payment of dividends worth $10.7mn, while the company has recognised total impairment provisions of $14mn against its investment.

The fact that IBRC is increasing its level of provision for impairment indicates that they have revalued what they perceive as the recoverable amount from the fixed assets.

In the filings, Caroline Brittan, senior statutory auditor at Deloitte, questioned whether the group can continue as a going concern given its net loss of $3.75mn during the period ending June 30, 2016, and its net liabilities of $3.86mn.

“These conditions, along with the other matters explained in the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company’s and group’s ability to continue as a going concern,” Brittan wrote.

The company’s overall net shareholder deficit stands at $3.8mn compared with just $80,404 in 2015.

Demand for commercial real estate has largely collapsed in the Russian regions, where many of the Quinn assets are located.

The filings further state that the company “may be unable to realise its assets and discharge its liabilities” due to the economic and political situation in Russia and Ukraine.

Irrespective of the situation, the filings say the IBRC continues to fund the company so it can continue to operate “for the foreseeable future”.

IBRC began using the services of Fridman’s firm in 2013 in a bid to recover the Quinn assets after previous efforts proved fruitless.

The Irish state agency claimed that Quinn and relatives, or agents for them, sought to undermine IBRC’s security over the assets by transferring shareholdings to Russian companies and individuals for “nominal consideration”.

Stephen Kenny, an IBRC executive, previously told bne IntelliNews that the Quinns tried to use structures in Belize and Panama to move the assets away from the state. 

A1 attempted to sell Q-Park, a vast logistics parks in Kazan once valued at €50mn, at auction twice last year but withdrew it from sale after failing to attract a single bid.

The jewel in Quinn’s property empire is the Kutuzoff Tower, a 20-storey Moscow office block now worth a fraction of its original €140m value.  

The tower is doing better than most of  the other Quinn assets. The building is home to big international and Russian corporates, including Coca-Cola and Dunlop, and is about 80% full, according to employees who work there. 

However, leases were priced in dollars and some tenants left or had to renegotiate on much cheaper terms after the ruble’s devaluation in 2014. 

IBRC declined to provide details of the rent roll for the assets, which was worth €35m in 2012. Other assets include the Univermag shopping mall in the Ukrainian capital Kyiv, which was acquired by the Quinn family for €60m.

The filings indicate that the Quinn assets are now being managed from Moscow by a company called OOO Solids.

Jim Devlin, an IBRC spokesman in Dublin, declined to comment and the two directors for the IBRC Investment Recovery, James Brydie and Alan Hurley didn’t return calls or emails seeking comment.

The state is suing members of the Quinn family for allegedly putting international assets beyond reach while the Quinns claim that the liquidation of IBRC was invalid and have sued Kieran Wallace over his appointment as special liquidator.

Quinn, who was sent to jail for nine weeks in 2012 for contempt of court, said his family lost €3.2bn from 2007 to 2008 as the value of its investments crashed amid the financial crisis. Wallace told the Commercial Court in 2015 that the IBRC had to overcome “dishonest and fraudulent activity” to secure control over major assets.

The Quinn family have denied these allegations and are suing the state for €4bn, claiming that loans worth €2.34bn loans were made to various Quinn companies for the unlawful purpose of propping up the Anglo Irish Bank’s share price.

Quinn invested in Anglo Irish Bank, one of the leading lights of Ireland’s Celtic Tiger economy, and built up a 25% stake in the bank. The investment went disastrously wrong in 2008, and the bank, was bailed out by taxpayers and was nationalised in 2009 by IBRC.

There has been speculation that the Quinns may yet return to take control of the Russia and Ukraine assets as part of mediation with the government.