Decision details
Davenant Centre Loan Consolidation
Decision Maker: Corporate Director, Resources
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
Decision:
To advance a loan to the Davenant Centre,
consolidated with its existing loan from the Council, in order that
the full restructured loan will be repaid over a ten year period
with interest accruing at a commercial rate. The loan will be
secured through a first charge on the title of the Davenant
Centre.
Reasons for the decision:
The proposed loan refinancing will provide the
Davenant Centre with enhanced certainty regarding its funding,
enabling it to make longer term financial decisions and providing
the potential for it to undertake capital works that will enable
additional rental income to be generated.
If the existing loan arrangements were to continue interest would
accrue on the existing balance, with the loan being repayable in
full in 2030. The revised arrangements will provide a loan over ten
years, with monthly repayments beginning immediately, meaning that
the Council will recover its funding over a shorter time
period.
Currently the first charge on the Davenant Centre’s assets
rests with another lender meaning that the Council is an unsecured
creditor in the event of the Centre encountering financial
difficulties and being unable to repay the existing Council loan.
Approval of the loan restructuring means that the first charge
would pass to the Council meaning that the Councils' loan will be
fully secured.
Alternative options considered:
The existing loan arrangements could continue,
however this would mean that the loan will not be due to be repaid
until 2030, and the Council will not be a secured creditor if the
Davenant Centre encounters financial difficulties.
Publication date: 28/11/2018
Date of decision: 29/10/2018