Amendment of Loan Arrangement - NOV19/CMDN/59
Decision Maker: Cabinet Member for Finance
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
With the approval of the Chairman of Growth, Environment, and Resources Committee, the urgency, special urgency, and waiver of call-in procedures have been invoked to suspend the requirement to advertise the decision on the forward plan, to publish the decision for five days, and to suspend the ability to call the decision in. These procedures has been invoked to ensure the continuity of the loan facility contract.
The Cabinet Member:
1. Approved the amendment of the terms of the Strategic Partnership with Empower Community Management LLP
2. Approved the amendment of the financing agreement with ECS Peterborough 1 LLP
3. Approved the Council entering into such further agreements with ECS Peterborough 1 LLP and any other body necessary to facilitate the arrangements set out in this report.
4. Delegated to the Corporate Director, Resources and Director of Law and Governance the ability to finalise matters 1 to 3 above.
Reasons for the decision:
This initial 2 month short extension supports the loan refinance process and enables the smooth transition of the loan from the Council to Global Tower Solutions. In the event this has not completed or no longer offers the best value to the Council the additional six month extension will allow the Council to progress the refinancing of its loan with an alternative long term funding institution.
During the period of the extension the Council will continue to receive an income from the interest which will contribute to the Council’s MTFS savings targets.
Alternative options considered:
If the Council fails to extend the loan, then on 1 December 2019 the loan repayment will be due in full and if it is not made ECSP1 will be placed into default and the Council would be required to exercise its security and take over the assets of the company. At this point the Council will then have to operate the company either on a long term basis or on a short term basis whilst it concludes the long term financing process. This option is not considered to be in the Council’s best interests at this time for the following reasons:
1. The Council does not have experience of operating in this market and would therefore need time to acquire the additional skills and personnel required to operate the ECSP1 business, in addition it would require additional advice from its legal and financial advisors Pinsent Masons and Deloitte and would need to procure a specialist technical advisor for this process.
2. The refinancing negotiation progress with Global Tower Solutions would be subject to considerable delay and incur further legal expense in order to reflect the change of ownership.
Similarly if the loan is not refinanced with Global Tower Solutions after the further 2 month extension, a failure to extend the loan for a further period to enable refinancing with a second investor would result in the same consequences set out about.
The Council can choose to continue funding for ECSP1 over the life of the solar panel assets, but the current loan was not constructed as a long term facility and a long term loan will require the implementation of a new loan facility.
Interests and Nature of Interests Declared:
Cabinet Report JULY17/CAB/16
Councillor Member Decision Notice MAR18/CMDN/123
Urgent item?: Yes
Publication date: 26/11/2019
Date of decision: 25/11/2019