Council Owned Companies to be Merged

By waterfront : 22 May 2009

The changes follow a detailed review of how arms-length companies operate and are focussed on development firms EDI, Waterfront Edinburgh Ltd, PARC and Shawfair Land Limited.

The review of Council Owned Companies was ordered by Council Leader Jenny Dawe after concerns about the efficiency of maintaining multiple operations.

The review underlines the impact of the current recession on Council property companies with land and property values falling across the board. Previous reports to the Council have provided details on how this has affected the individual companies.

The report proposes the companies will be merged under the CEC Holdings Limited umbrella. The restructuring is aimed at securing savings through reduced borrowing and operational costs and creating a sharper operational focus on development projects.

Under the proposals the Council will borrow up to £70m to purchase property interests from EDI, WEL and PARC.

The rationale behind this approach is that Council borrowing is significantly cheaper than the commercial loans currently financing the property portfolio. Rental income from the property portfolio will fully cover the interest payments on the Council’s borrowing. The reduced interest payments would also allow cash resources for future development, while repaying debt over an appropriate period of time.

Councillor Gordon Mackenzie, Convener of the Finance Committee and chairman of CEC Holdings said:

“It makes sense to rationalise our development companies, particularly in the current economic climate. This restructuring will ensure the companies play their part in improving the City’s economic development performance going forward.

“These imaginative proposals will bring the necessary financial stability to our arms-length companies without detriment to Council finances.”

Further details of the staffing structure of CEC Holdings Limited will be brought before Council in the coming months.

John Mark Di Ciacca, Acting Chief Executive of The EDI Group Limited, said:

“The team are committed to working with the shareholder to continue to build on its successful track record of delivering a wide range of property developments over the past 20 years.”

Colin Hunter, Chief Executive of Waterfront Edinburgh Ltd, said:
 
"We are looking forward to working closely with The City of Edinburgh Council and the other council companies to ensure a smooth transition into CEC holdings.  This restructure reinforces the Council's commitment to regeneration in North Edinburgh."

Categories: Economic Development

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