黑洞社区

The private sector consortium behind the 2014 Commonwealth Games village is planning to turn to one of Britain鈥檚 biggest pension funds for financial assistance after raising only 拢5m of its expected 拢40m contribution to the development.

Glasgow council鈥檚 executive committee will tomorrow morning (2 February), be called upon to support the local authority acting as guarantor for the application by the City Legacy Limited (CL) consortium for 拢35m from Strathclyde Pension Fund (SPF), which is administered by the council.

Council papers seen by 黑洞社区 show that CL 鈥� which is made up of MacTaggart & Mickel Homes, Cruden Investments, CCG and WH Malcolm 鈥� has been unable to reach agreement with Royal Bank of Scotland (RBS) for the loan.

The required level of private sector funding is 拢40m compared with 拢140m from the public sector.

鈥淭here is a cash flow funding requirement of up to 拢35m and CL has been in detailed negotiation with RBS for the provision of this funding,鈥� the document states.

鈥淐L and RBS have been unable to reach agreement to date on the detailed terms of the loan, in particular with regard to the level and type of corporate guarantees that RBS is asking each individual consortium member to provide.

鈥淭he type of guarantee being sought by the bank is a 鈥榗ash-call鈥� guarantee which can be triggered by a number of unrelated default events within the individual members of the consortium not specific to the games development.

鈥淭his type of guarantee鈥�places a level of financial risk on the individual partners within the consortium that they cannot accept.鈥�

The document also points to the 鈥渢ightening鈥� of bank lending terms and availability since the development agreement was signed between the council and CL in April 2010.

The new funding proposal asks the council to support CL鈥檚 application to the pension fund鈥檚 鈥榥ew opportunities portfolio鈥� by providing a guarantee to the fund.

鈥淚f the provision of a guarantee is approved, the council will require a back to back guarantee from each of the companies that make up the consortium,鈥� the document continues.

Under the terms of the proposed deal, CL would be required to pay all costs of arranging it and would also pay the council around 拢2m refinancing charge.

The local authority argues that the financial risk it faces would not exceed 拢1m because of factors including the one-off payment of 拢2m and the ring-fencing of public sector funding.

SNP council leader Allison Hunter told 黑洞社区 that her party would support the motion but accepted there was a risk.

鈥淭here is a slight risk but it has been qualified by the [council鈥檚] financial director and I think it is bearable,鈥� she said.