Waterfront Leisure Complex ("WLC"): Acquisition by States of Jersey Development Company ("SoJDC")

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A decision made on 19 October 2018

Decision Reference: MD-TR-2018-0126
Decision Summary Title:	Acquisition of Waterfront Leisure Complex (“WLC”) by States of Jersey Development Company (“SoJDC”).		Date of Decision Summary:	12th October 2018
Decision Summary Author:	Head of Shareholder Relations		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Acquisition of Waterfront Leisure Complex (“WLC”) by States of Jersey Development Company (“SoJDC”).		Date of Written Report:	12th October 2018
Written Report Author:	Head of Shareholder Relations		Written Report : Public or Exempt?	Exempt: FoI Article 33
Subject: Acquisition of Waterfront Leisure Complex (“WLC”) by States of Jersey Development Company (“SoJDC”).
Decision(s): The Minister decided:- a) to approve the acquisition of the remaining long leasehold of the Waterfront Leisure Complex (“WLC”) (133 years), for a sum disclosed in the exempt written report, by a wholly owned subsidiary company of SoJDC; b) to approve SoJDC to enter into a funding agreement with HSBC in accordance with the Heads of Terms to part fund the acquisition price, as set out in the exempt written report, using the WLC as security; c) to approve SoJDC making up the balance of the acquisition costs, initially through the use of Rolling Credit Facility 3 (“RCF 3”). On the sale of future developments, including IFC 1, the sum drawn from the RCF will be repaid from the proceeds, as set out in the exempt written report.
Reason(s) for Decision: P.73/2010 (Section 8) provides SoJDC with the ability to purchase and develop property assets that are required to achieve regeneration strategies, subject to identified principles and protocols. SoJDC requires the Ministers approval to enter into external financing and charge its property in accordance with Section 27 of SoJDC’s Articles of Association which states: “Subject to prior written consent of the Minister, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof ……” and in accordance with the MoU Section 13.1 which includes the requirement for the consent of the Minister if SoJDC:- “creates any material mortgage or security interest, other than any arising by operation of law or prior agreed limits over any of SoJDC’s assets; gives any material guarantee, indemnity or security in respect of obligations of any person other than in the ordinary course of trading; borrows any material sum or factor or discount any material book debts, except in respect of the leasing or of plant or equipment in the ordinary course of trading and except as permitted under the terms of any working capital and capital expenditure facilities which may be made available by the States of Jersey to SoJDC;” The acquisition of the site has been supported by the Regeneration Steering Group at its meeting on 28th September 2018. All current debt is properly structured and linked to specific developments and all developed assets are worth more than the debt provided to construct the asset. Furthermore, the Company’s debts can either be serviced by the rental generation from the assets or repaid through disposal and still provide a surplus. It is recognised that rental income from this acquisition is sufficient to cover debt repayments from the loan.
Resource Implications: There are no financial implications for the States and dividend assumptions will remain in line with the Medium Term Financial Plan 2016-2019.
Action required: Head of Decision Support to advise the Director of Treasury and Investment Management once this decision has been signed. The Director of Treasury and Investment Management to inform the Finance Director of SoJDC that the Minister has approved the request. In accordance with Section 12 of P.73/2010, this decision will not take effect for 15 days from the date of signing.
Signature:		Position: Deputy Susie Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision: