Agenda item

Amendments to the Funding Agreement for Be First Developments (Muller) Limited and Resolution to Dispose of the Muller Dairy Site on Shareholders Terms

Appendices 2 and 3 to the report are exempt from publication as they contain commercially confidential information and legal professional privileged information which is exempt from publication under paragraphs 3 and 5 respectively of Part 1, Schedule 12A of the Local Government Act 1972 (as amended)).


Further to Minute 109 (11 February 2020), the Cabinet Member for Finance, Performance and Core Services presented a report on a proposal to dispose of the former Muller dairy site, Selinas Lane, Chadwell Heath, that had been acquired in July 2020.


The Cabinet Member advised that the site had always been intended for onward sale to a private developer in the medium-term.  The acquisition of the designated Locally Significant Industrial Site meant that the Council would benefit from any uplift in value while Be First progressed plans for the promotion of the site as a major mixed residential and employment development space.  However, strong demand for commercial space in east London had resulted in a number of unsolicited offers from major industrial / mixed use developers during the past 12 months, ahead of the planned disposal schedule.  In view of the significant interest and the values of the unsolicited offers, Be First carried out a formal marketing exercise which had resulted in three Best and Final Offers (BFOs) being received.


The Cabinet Member alluded to the evaluation of the BFOs, the details of which were included in an exempt appendix to the report, and the options appraisal which supported the proposed sale to the preferred bidder, as it would achieve a profit in excess of earlier estimations and represented the best scheme in terms of employment and design.  It was further noted that the net profit from the sale would be paid back to the Council as dividends and accounted for as revenue income, to be used to support the Council’s Medium Term Financial Strategy.


The Cabinet Member also referred to updated legal advice in respect of public subsidy rules and advised that, should the sale of the site not be completed by the end of the current financial year, it would be appropriate to convert the 0% element of the Public Works Loan Board funding used to purchase the site from a loan to equity (in the form of shares).


Cabinet resolved to:


(i)  Agree that the Council, in its capacity as the Shareholder of Be First Developments (Muller) Limited, approves the disposal of the site shown edged red in Appendix 1 to the report to the preferred bidder on an unconditional basis, in accordance with the terms set out in Appendix 2 to the report;


(ii)  Agree that the Council authorises, as Shareholder of Be First Developments (Muller) and in conjunction with the Directors of the Company, the conversion of the zero percent element of the loan to equity by issuing new share capital in the event of the sale not being completed by 31 March 2022;


(iii)  Authorise the Managing Director, in consultation with the Strategic Director, Law and Governance, to repatriate any profits issued by Be First Developments (Muller) Ltd back to the Council;


(iv)  Authorise the Managing Director to undertake any action or execute any legal documents required to wind up/liquidate the company; and


(v)  Delegate authority to the Managing Director, in consultation with the Strategic Director, Law and Governance, to agree and enter into any legal agreements and contract documents to fully implement the above proposals.

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