Wed, 28 Mar 2012 | ADMINISTRATION
London & Westcountry Estates has entered administration following a failure to reach an agreement with the private equity firm Blackstone that provides the majority of its credit. As a result, Ernst & Young have been called in and began to remove paperwork and other items from the firm's base in Plymouth earlier this week.
The administrators confirmed to the Plymouth Herald that they intends to sell the company and its assets, despite the fact that director Bruce Priday claims the firm remains profitable and well managed.
London & Westcountry Estates was established in 1983 by Mike and Diane Hockin. It operates 27 business parks, reaching from Cornwall to Somerset and housing around 300 tenants, the majority of whom are small businesses.
Mr Priday noted that problems with the Royal Bank of Scotland (RBS) are largely to blame for the business's problems.
He told the Herald that a £57 million loan was taken out with RBS back in 2008 in order to finance an expansion. The loan was established as a “callable libor swap option”, which should have protected against upward movements in interest rates by using a fixed rate.
However, the Bank of England soon reduced the base rate to just 0.5 per cent, leaving the property group tied into a higher rate of interest than it had planned for and a charge of £11 million should it wish to exit from the loan arrangement.
“There are lots of businesses in the South West that were flogged this derivative [by RBS] and it's completely inappropriate,” he remarked.
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