REG - Sutton Harbour Grp - Former Plymouth City Airport Update

Sutton HarbourAnnouncement

02/02/2024 07:00

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RNS Number : 7764B  Sutton Harbour Group PLC  02 February 2024

2 February 2024

 

Sutton Harbour Group plc

("Sutton Harbour" or the "Company")

 

 Former Plymouth City Airport Update

 

Further to the Company's announcement on 25 January 2024, noting the press
statement published by Plymouth City Council (the "Council") alleging breaches
of covenants on the long lease (the "Lease") of the former Plymouth City
Airport site by the leaseholder, Plymouth City Airport Limited ("PCAL"), a
wholly owned subsidiary of the Company and the letter from the Council
referenced therein. Sutton Harbour categorically rejects the allegations of
breaches of the Lease and provides further background and detail in this
regard as follows:

 

Background

 

·      Sutton Harbour originally acquired PCAL in April 2000.

·     A notice of non-viability of the Plymouth City Airport, per the
Lease, was delivered to the Council on 24 December 2010 by the Company and was
interrogated by the Council. The decision to accept the notice of
non-viability was adopted by the Cabinet of the Council at a meeting of 23
August 2011 and Plymouth City Airport was duly closed with the agreement of
the Council during 2011.

·     The approved Joint Local Plan governing development in Plymouth and
its surrounding areas for 17 years came into effect in 2019. It was accepted
by the Government Planning Inspectors that development of the former Plymouth
City Airport site (the "FAS"), which comprises approximately 113 acres of
brownfield land, for uses other than aviation operations should be postponed
for a maximum of five years, which would allow enough time for a viable
aviation proposal to be brought forward, if one was to be forthcoming. A
report published by the Planning Inspectors on 18 March 2019 concluded
"Aviation operations at the former Plymouth airport site ceased in 2011. The
Plan identifies the site as a strategic infrastructure asset and Policies SPT8
and PLY42 seek to safeguard it for re-use as a general aviation airport, until
the five-year review of the Plan." Such five-year period is due to expire on
31 March 2024.

·   The Planning Inspectors advised that the site, which is located in
close proximity to established surrounding residential neighbourhoods,
industrial space, the leading hospital in the southwest region, a university
and transport infrastructure, was too valuable to be 'frozen' for a longer
period.

Maintaining the Former Airport Site

 

·     Since December 2011, an agreement (the "Agreement") has governed the
mutual understanding and conduct of the Company and the Council in relation to
the FAS.  As recorded by the Council in a letter to the Company dated 20
December 2011, "From 24 December 2011 we enter a new phase in terms of the
Council's/Sutton Harbour Holding's tenure and management of the land at
Plymouth City Airport following the acceptance of the letter of Notice of
Non-Viability.  We will move from operational airport management to
asset/land management of an area of land that has significant strategic
importance to the City...".  The Company has since expended considerable time
and capital in respect of its management and safeguarding of the FAS, with the
fully informed knowledge and approval of the Council.

·     Over the past 12 years, there have been numerous detailed inspections
of the FAS by the Council's representatives and facilitated by the Company,
the latest one being on 25 November 2022. The Council has never raised any
matters of complaint regarding PCAL's compliance with the terms of the Lease,
nor with its management and safeguarding of the FAS, following any such
inspections. Since the latest inspection on 25 November 2022, the Company has
not received any communication from the Council or their appointed surveyors,
in relation to that visit, indicating any concerns; nor has there been a
request for any further visit since.

·     The Company confirms that PCAL has, at considerable expense, at all
times complied, and will continue to comply, with the covenants in the Lease
consistent with the Agreement as recorded in the abovementioned letter from
the Council dated 20 December 2011.

·      The present value of total net cash expenditure by the Company on
the FAS and former aviation operations since its acquisition amounts to more
than £27 million, and the Company continues to expend approximately £200,000
per annum in maintaining and safeguarding the FAS.

·     The Company has sought to defray some of these ongoing costs through
permitting Derriford Hospital to make use of parts of the FAS for temporary
parking and as a temporary staging site for construction operations. However,
the Council has denied permission for any such temporary uses of the FAS,
thereby precluding the possibility of the Company earning any revenue from the
FAS while managing and safeguarding the site.

·     As advised in various public statements made by the Leader and other
members of the Council, the Company had been involved in negotiations with the
Council regarding the possibility of PCAL relinquishing the Lease and the
subsequent sale of the FAS. The Council ended the discussions because the
parties were unable to agree on certain legal issues.. The Company remains of
the view that it would be worthwhile for both parties to set aside the legal
issues and to engage in discussions regarding the optimum development
arrangements for the Site going forwards.

Interim uses of the Former Airport Site

 

·     Whilst managing and safeguarding the FAS, the Company has
collaborated with the Council to facilitate its request to store pre-cast
bridge concrete bridge beams on the runway whilst a major flyover bridge link
road was constructed in Plymouth during 2021. The sublease granted by PCAL to
the Council's contractor was charged at a peppercorn rent of £1.

Possible future aviation operations

 

·     The Company has received several proposals from bodies that have put
forward the possibility of re-starting aviation operations using the site,
however none of these proposals have provided a viable commercial proposition,
nor demonstrated substantiated evidence of committed capital or operational
funding.

·   The Joint Local Plan in its current form, in conjunction with the
safeguarding of the FAS until 31 March 2024 confirmed by the Planning
Inspectors, has identified the site for possible "general aviation" (private
small aircraft and helicopters) but not "commercial aviation" (scheduled
public flights and services).

 

Company's Intentions

 

·     As detailed above, since 2011 the Company has managed and
safeguarded the FAS at its own expense, all with the agreement and to the full
knowledge of the Council.

·    In accordance with its responsibilities under the terms of the
Lease, the Company has been working on a pre-submission planning process in
anticipation of expiry of the abovementioned five-year period, during which
any alternative use of the FAS has been precluded in accordance with the
Planning  Inspectors' recommendations. The Company expects to submit a
masterplan for a phased development of the FAS to the Council in its capacity
as Local Planning Authority in the coming weeks. This masterplan will set out
three phases of development whereby phase 1 (over the next three to five
years) will preserve the main runway at the FAS, but will propose development
for institutional, business and housing development on other areas of the
site. This approach will allow further time for a financially viable aviation
proposition to materialise. Phases 2 and 3 of the masterplan involving staged
reductions of the runway will set out the development strategy for the FAS
going forward, should a financially viable aviation proposition not
materialise.  Phases 2 and 3 will include an additional mix of uses including
a range of social and market housing types.

·    The Company is willing to engage in discussion with the Council in
respect of these matters. The Company has maintained its openness and
willingness to engage with the Council throughout the safeguarding period.

·     Furthermore, the Company has at all appropriate times taken legal
advice regarding PCAL's and its own position with regard to the FAS, and is
prepared to robustly defend its PCAL leasehold interest in the FAS should it
need to do so.

The Company will provide further update(s) as appropriate in due course.

 

For further information, please contact:

 

 Sutton Harbour Group plc                         +44 (0) 1752 20 4186  Philip Beinhaker, Executive Chairman

                                                                        Corey Beinhaker, Chief Operating Officer

                                                                        Natasha Gadsdon, Finance Director
 Strand Hanson Limited                            +44 (0) 20 7409 3494  James Dance

 (Nominated & Financial Adviser and Broker)                             Richard Johnson

 

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