Saturday, 31 October 2015

Friday Ramble

The Manston Airport cpo saga finally seems to be over, the main stumbling block was the same one that stops most property deals.


In layman’s terms and with a lot of guessing, here is how I see the series of events.


A very large foreign company own an airport which isnt showing a profit and this looks bad on their balance sheet.


This is perceived as being detrimental to their company image something that is probably costing them millions of pounds a year, in terms or investor credibility, overall share price and borrowing costs.


They want to dispose of this airport in a way that means there will be no adverse publicity for their company, therefore it has to be disposed of to another large company, that can’t go into liquidation and is guaranteed to take any flack should the airport have to be closed.    


Irate employees who have made redundant, airport supporters if such people exist, unpopular redevelopment of the site were all mud that if slung, would have been very expensive to a company with an annual turnover of billions.


The easiest part of this to understand is that for a company with running debt of over NZ$1bn or 1,000,000,000 then 1% on the interest rate they are borrowing at is 10,000,000 per year.


So what they did was to sell the airport to Ann Gloag, the idea being that she would try and make it work as an airport and if she couldn't, she could sell the assets including the site for as much as she could.


I would think when this is all added to the costs of running the airport, keeping Manston could easily have cost them much more in a year than they could ever have hoped to get for it.


Well we all know the airport closed and then Ann Gloag decided to sell it, word on the street is that the asking price was in the £7m ball park.


The only two contenders were RiverOak and Discovery, very big companies with that sort of money to gamble on a project. In both cases I think neither could pay cash, or they would have done straight away.


For the seller, this comes down to the buyer's assets and provable income added any cast iron guarantors, just like if you or me want to buy an expensive item and don’t have the cash. If you have a house worth £200,000 and want to spend £50,000 on an expensive car but only have 10,000 it’s much easier than if you don’t own a house.


The next stage was the council trying to buy it by cpo. To understand this you have to appreciate that the first stage of process would be the council making an offer in the likely price ballpark.


The council has never made an offer for the airport and can’t start the cpo process without having done so, it has to be the acquiring authority making the offer and it has to be in the £7m ball park.


Obviously as Riveroak have said they have already made offers in this ballpark, all RiverOak have to do is give £7m to the council, then the council can offer it for the Airport.


If the owner says yes, then the council buys it, give the £7m to the owners who give the airport to the council, who give the airport RiverOak.


So the first of the many hurdles was for RiverOak to give £7m to the council, they never did manage this.


Another pen and watercolour view from Chocolate Cafe in Canterbury.




Doing this during half term when I get my children snacks there, adds to the fun.



On to the absence of blogging the past few days, the truth is I am writing an account of my youth and don't have much time for other writing.

Finally whoever clocked the 2m mark on the counter here, a wave from the spiral staircase of my life, to the spiral staircase of yours.  

3 comments:

  1. Michael when will all this Manston fiasco come to an end. I supported Manston and would have loved it to continue as a going concern but now it is over and time to get behind the next phase, all this filibustering is doing nothing and it is time to move on.

    ReplyDelete
  2. Don unlikely when UKIP and the Tories can still get political capital out of pretending to support it

    ReplyDelete
  3. UKIP will enhance their standing with local people greatly if they stop the messing about. The cabinet showed that they have the stomach to make hard decisions and aren't prepared to be bullied or intimidated. The worst thing they could now do is to keep pretending that the CPO could still happen. In fact, this tactic could land them in serious hot water because the legal owners have already suffered delays and obstruction to their plans. Further chaos could see writs issued. They need to have confidence that, if they start working constructively with SHP there could be many hundreds of jobs on site well before the next election. Step 1 would be to review the Instro Precision application and pass it quickly, because that will establish the site. Employers are far more likely to relocate to a site if a major employer is already present.

    ReplyDelete

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