Thursday, February 26, 2015

News: Commissioners to decide on Magna loan

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The final decision on whether the Council makes £350,000 available to support the operators of Magna Science Adventure Centre in Rotherham is likely to be made by government-appointed commissioners.

Set in the former Templeborough steelworks, Magna is a family attraction with more than 100 hands-on exhibits. Millions of pounds have been invested in conference facilities at the centre which is operated by a charity, the Magna Trust.

In January, Rotherham Council's interim chief executive approved an immediate £100,000 loan after the Magna Trust identified a potential cash shortfall. The council's cabinet were also recently asked to approve a new loan facility of up to £250,000 to start on April 1 2015, taking the total available for the year to £350,000.

That decision was deferred pending an independent consultant being appointed to undertake a review of Magna's business, to help to strengthen the Magna business plan and to assess the future viability of Magna and to give some assurances moving forward. The decision was "called in" by opposition members for further scrutiny.

Issues to be examined by the independent consultants include the Magna Centre's current trading levels, the leisure and other events scheduled to take place at the Centre, as well as the method of structuring the company in the future.

The possible development of a hotel and restaurant is being considered as one means of trying to attract more investors to the business.

Opposition UKIP councillors stated that "there is no justification for this Council continuing to provide loans to the Magna Trust" and that there is no need to appoint an independent consultant as the study could be completed by the Council's own finance officers.

The call-in request was not supported and the cabinet's decision stands. The Magna Trust is set to work on its business plan and the council has the authority to commission independent consultants, at an expected cost of £15,000 - £20,000, to assess the plan. It could take three months before the assessment is completed but when the information about the business plan is available, the Government-appointed Commissioners to the Council will be asked to make a decision about it.

Following a government-commissioned report that deemed Rotherham Council "not fit for purpose," the commissioners set to take over the leadership and executive functions, could be announced this week.

Cllr. Emma Hoddinott, deputy leader at Rotherham Council said at the special meeting on the Magna issue: "This Council's involvement with the Magna Trust has lasted many years; it is now important that the Council obtains an independent opinion about the Magna Centre's future business opportunities. The independent consultants will provide expertise which is not available to the Council in-house. It is preferable that the Council seeks to get a fresh pair of eyes to study the Magna Trust's business plan."

The Trust has so far drawn down £75,000 of the £100,000 made available in January following a fire in an adjacent property that affected the business. In 2006, Rotherham Council provided a £300,000, 15-year long term loan, with £195,000 currently outstanding but a "payment holiday" has been in place since 2013.

In 2008, during the recession, the Council provided Magna with an unsecured one year working capital facility. This is reviewed annually by the Council's cabinet and a sum of £250,000 was agreed in March 2014. An additional unsecured £80,000 bridging loan facility was agreed in January 2014 which has not yet been repaid. The existing £250,000 council loan is set to be repaid, with outstanding interest of £6,250, on March 31 2015.

It is believed that were it not for the Council's financial support then Magna would have been forced to close.

Rotherham Council's finance manager told the meeting that there is £195,000 currently outstanding on the long term loan but reiterated that the council does not provide a direct subsidy to the Magna Trust - all financial support is in the form of loans, which the Magna Trust pays back with interest.

One issue for the Council is the fact that the loans are secured only against the offices fronting Sheffield Road, which are not worth as much as they once were. The issue of leases and a complex inter-creditor deed is also being addressed. Parties on the deed include the Big Lottery, DCLG, Yorkshire Forward, Lombard Property Facilities Limited, and the Royal Bank of Scotland.

The Council is one of three members of the Magna Trust, together with the Rotherham Chamber of Commerce and The Stadium Group, the developers of Meadowhall and Parkgate Shopping, brought in at the start to add weight to the Millennium Project.

Magna website

Images: Magna

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