INTU, the owners of Eldon Square shopping centre, in which the Council has a financial interest, has appointed KPMG to make contingency plans for the group to go into administration.
INTU is in talks with lenders, with a deadline for renewing its revolving credit facility contingency waivers this week. It is seeking an 18 month standstill including repayment of maturing debt, a company statement on 23rd June confirmed, saying "there is no certainty as to whether INTU will achieve a standstill."
INTU had previously reported to the Stock Exchange at the last quarter day in March that it had received only 29% of rents due. The next quarter day is 24th June. INTU has reduced capital spending and some service charges. Its stock market value has fallen 99% over the last 5 years.
So last night, at full Council, Cllr Robin Ashby, who speaks for the Liberal Democrats on business matters, sought to ask these question (the picture of him on YouTube is with the Lord Mayor, top left, and Cllr Peter Lovatt bottom right):
"What discussion has the Leader and Cabinet Member for Employment had with INTU, Intu Eldon Square Ltd and their agents, and what contacts have they authorised for officers to meet INTU, its subsidiaries and agents, lenders, and those of its anchor tenants, about the financial viability and future of Eldon Square, including discussions of lease variations?
"What contingency plans have they proposed or directed to be drawn up to offset the loss of revenues to the City Council from the downturn in rentals received even before the health lockdown, as well as recent decline in business rates income? What estimates have been made of the potential reductions in income, and what discussions have been undertaken with Government about additional financial support?
"What liabilities does the Council have in the event that INTU goes into administration, pre-pack administration or liquidation?"
But the questions weren't accepted on a night which saw debates on skills traing, black lives matter, mental health and the future of Hong Kong tossed aside with councillors getting the chance to speak.
Today, the Council confirmed that it had indeed had discussions about the future. In response, Cllr Ashby said :
"Eldon Square is the retail heart of Newcastle, with its 150 businesses and many more employees. But it is caught on the horns of the revolution in the way people shop, accelerated by the loss of consumer confidence and activity resulting from the Covid pandemic.
"An unconditional bail-out by the Council, while a short-term fix, could be a disastrous long term investment. We would need to be convinced that Council taxpayers money - either revenue or capital - was spent based on a robust business plan which re-visioned this vital infrastructure to serve local people and businesses, not just to be a source of profits which leave the City every night.
"Newcastle Liberal Democrats would like to see our city centre offering the experiences people want in the future, such as locally-based, independent retailers, with environmentally friendly spaces in which to meet. The success of some Grainger Market shops during the lockdown, aided by the Council, in quickly changing their business model shows what can be achieved through imagination, hard work and partnership."Published and promoted by Newcastle upon Tyne Liberal Democrats, 41 Rydal Road Gosforth Newcastle Upon Tyne NE3 1URPrinted (hosted) by Prater Raines Ltd, 98 Sandgate High Street, Folkestone CT20 3BY
© 2020 North East Liberal Democrats. All rights reserved. Published & Promoted by Greg Stone, Liberal Democrats, 38 Faldonside, Newcastle NE6 5UH on behalf of North East Liberal Democrats. Printed (hosted) by Underwood Technology Ventures Limited, Gateshead IBC, NE8 1AN.