Agenda item

Further to Minute 94, of the Cabinet, the City Council considered a report of the Director of Finance which indicated that the Council has a long-standing interest in Coombe Abbey Hotel as the landlord for the property as well as being the owner of the Country Park within which the hotel is located.  The Council provided financial resources in the shape of a loan to Coombe Abbey Park Limited (CAPL) in 2013 as part of re-financing the borrowing the Company had in place at the time.  Subsequent to this, the Council acquired 100% of the shares in the company in 2017 to become the sole shareholder.

Following the acquisition of shares the financial performance of the business has been affected by primarily external factors.  Over the last 12 months, the hospitality sector has suffered immensely as a result of the Covid-19 pandemic with mass cancellations across rooms, events and conferences.  In 2020 the hotel was able to trade for only 78 days without restrictions and 115 days with some restrictions in place which has affected the ability of the business to generate revenues in line with expectations. 

The Council provided a short-term loan to the business in June 2020 to support the operating costs of the business as result of the impact of Covid-19.  This facility is currently due for repayment in December 2021.

In an effort to reduce operating costs under the challenging circumstances, the Company have furloughed all but 6 members of staff. However, the inability to generate revenue has meant that the business has had to defer a number of payments that would have been due to the Council, these include rent and repayments of existing loans. The Company is now in a position where they will not have sufficient cashflow to meet expenditure beyond March 2021 without further support from the Council.

CAPL have requested that existing arrangements in place be refinanced and spread over a longer term to enable to Company to operate through any lingering impact of the pandemic, and to enable them to improve their financial position back to being profitable. Council officers have considered this request and carried out appropriate due diligence with CAPL Board and management to determine both the short and medium-term affordability.

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals. (Minute 114 below refers.)

The private report details the financial arrangements proposed, which in summary are seeking approval for a further facility to meet the costs of operation and refinance existing debt to make on going repayments manageable for the business.

RESOLVED that the City Council:

1)  Approves the use of its powers under the Localism Act 2011 to provide a Loan up to sum detailed in the corresponding private report, to Coombe Abbey Park Limited (CAPL) on commercial terms as detailed in the corresponding private report.

2)  Approves CAPL as the authority to set up two company subsidiaries to help support the business plan as further set out in paragraph in 2.15 of the report. 

3)  Delegates authority to the Director of Finance (S151 Officer) and the Director of Law and Governance, following consultation with the Cabinet Member for Strategic Finance and Resources, to finalise and agree the detailed terms of the transaction with CAPL. The authority under this delegation shall also include the power to enter into the necessary legal agreements and subsequently the power to negotiate and agree any such variations as is deemed necessary to the terms of the loan facility and ancillary security documents.