Additional information in relation to the administration of Hastings Pier Charity and the sale of the business operating on the Pier as a going concern on Friday 15 June 2018, from the joint administrators for Hastings Pier Charity.
Hastings Pier Charity went into administration on 24 November 2017 because it was loss making and unable to pay its creditors. Heritage Lottery Fund ‘HLF’ had funded the restoration of the Pier and related activity programme, through a Heritage Grant of over £12m.
The marketing and sales process
As administrators we ran a sales process for over six months and during that period the Pier continued to trade at a loss. The costs of administration and the trading losses have been funded by the HLF, who are also the largest creditor, to allow the Pier to continue in operation for the community of Hastings and for visitors while future options could be explored.
Without the funding put in place prior to the commencement of the administration process, the Pier would have had to cease trading and the charity go directly into liquidation, with all employees being made redundant. This would have placed this important heritage asset at risk.
Agents working on our behalf undertook a marketing campaign for several months, culminating in our agents requesting best bids and proposals by noon 12 April 2018 – this date was communicated to all interested parties The bids are confidential, as is market practice for administration, so that the process achieves the best outcome for creditors.
We received a number of offers and assessed those offers on a number of different criteria. The bids offered a price for the assets which were the Pier itself, the equipment on the Pier and the business of running the Pier.
HLF had a legal charge over the Pier itself, and their views needed to be taken into account as the largest creditor with a charge over the asset. Their aim throughout the process was that the heritage asset be sold to the party which demonstrated the highest probability of sustaining it financially into the future, and maintained the benefits for Hastings and the wider community. The bidders were therefore asked to explain their plans for running the Pier and demonstrate the ability to pay the running costs for operating the business and the upkeep of the Pier, which are involved and significant, for the future.
For a number of months after 12 April, our agents allowed bidders time to improve their offers, and held discussions with people who had expressed an interest in the Pier. However, the process could not continue indefinitely given that all operating costs were being met by HLF. These costs were proving to be far higher than originally envisaged.
In total, our agents received five firm bids in the months leading up to the sale. All offers were carefully reviewed and HLF was advised of the proposals throughout the process. We continued to receive and consider further offers and bids, including offers received last Friday.
The precise terms of the bids are confidential and we cannot comment on them in any detail. We were not in a position to tell other bidders our view on the bids received as the effect of that could have been potentially to reduce the price offered by individual bidders.
As is common in loss making businesses, the initial upfront payments in the bids received were relatively small in comparison to the expected investment commitment in the business. Those payments were reviewed together with a number of other factors including the ability of the purchaser to continue to operate the Pier as a going concern, their ability to transact quickly so that the sale could complete and the need for ongoing funding for the administration to reduce.
The Pier was sold to the bidder which offered the highest price for the assets, was able to complete quickly and was able to demonstrate the highest probability of supporting its ongoing trading into the future.
As administrators we cannot prefer one bid over another on emotional or other, non-commercial, grounds. This is what it means to be an administrator but it does have the benefit to bidders that it is a completely level playing field leading to a totally transparent process.
We understand that there is some criticism on the timescales allowed to bring together sufficient financial resources to win the bid for the Pier. We are conscious of the very substantial efforts a number of organisations, such as Friends of Hastings Pier, put into the bid process but we are also very much aware of the difficulties many organisations have had either raising sufficient funding to buy an asset, such as a pier, or convincing financial backers that they have a plan for a financial operation on the Pier which is fundable. All interested parties had over six months to work on their proposals. We were unable to delay the process any further as this would have increased the costs of the administration and the bids that we had could have fallen away.
The administrators will provide the customary reports to creditors on the administration, which will include the sale process and many other matters. Shareholders are not creditors and rank for payment only after all creditors have been paid. Unfortunately, in this insolvency, there is no prospect of a return to the creditors. In this instance the returns to the secured creditor are negligible.
The new owner
We have introduced the new owner to the various local interested parties and are seeking to work with the various parties to ensure that this new start for the Pier gets the cooperation and support it needs from the local community to make it a success.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Notes to editors
Smith & Williamson is a leading financial and professional services firm providing a comprehensive range of investment management, tax, financial advisory and accountancy services to private clients and their business interests. The firm’s c1,800 people operate from a network of 11 offices: London, Belfast, Birmingham, Bristol, Dublin (City and Sandyford), Glasgow, Guildford, Jersey, Salisbury and Southampton. Smith & Williamson is part of The Tilney Smith & Williamson Group.