Sahaviriya Steel Industries UK Limited (SSI) operated the former Redcar Steelworks which extended to circa 600 acres. SSI’s purchase of the steelworks was funded by a consortium of Thai Banks. In addition, SSI owned 50% of Redcar Bulk Terminal (RBT) with New British Steel owing the remaining 50%.
SSI went into liquidation such that the steelworks site was placed in receivership. In addition, SSI’s interest in RBT was also placed into liquidation but with a different receiver appointed. Meanwhile, New British Steel sold their interest in RBT to Jingye Steel Group which, in turn, triggered a pre-emption in favour of SSI.
A Development Corporation was formed who intended to step in and develop both the Steelworks Site and RBT using compulsory purchase powers. We were instructed to provide valuation and strategic advice to the Thai Banks in order to maximise their return.
The Development Corporation made an offer for the purchase of Redcar Steelworks. This offer included an allowance for remediation of contamination and reflected the need for significant infrastructure investment. In addition, the Development Corporation offered to purchase SSI’s share capital in RBT. The Development Corporation advised that, if terms could not be agreed, they would pursue the grant of compulsory purchase powers and, if granted, they considered that compensation would be minimal.
Extensive negotiations failed to result in a settlement hence the Development Corporation commenced proceedings for a Compulsory Purchase Order (CPO). DWD provided valuation advice and engaged in these negotiations on behalf of the Thai Banks whilst also providing strategic advice in respect of the proposed CPO. In this regard, the Development Corporation presented their proposals as taking land from foreign banks in order to redevelop a deprived area such that the matter became highly political both locally and nationally.
However, it was noticeable that the proposed CPO excluded 300 acres of land including the river frontage at RBT. In light of this we advised the Thai Banks in respect of the development prospects that could be released at the terminal having regard to the wider development proposed for the locality. In addition, we provided valuations for taxation purposes in respect of various land swaps that were required to maintain use of the conveyors and other equipment located on the site.
In the absence of being able to agree terms, a 2-week Public Inquiry was held during which DWD presented evidence to the Inquiry arguing that the CPO was not justified on a number of grounds. Subsequently, the Development Corporation agreed to a suspension of proceedings whilst terms were negotiated. An agreement was reached in light of which the Thai Banks withdrew their objections to the CPO such that the Development Corporation were able to achieve their aim of acquiring all known interests in the development area, whilst the Thai Banks were able to make a recommendation to their respective boards.
DWD were therefore able to bring together valuation and CPO strategies that enabled their client to develop RBT and take advantage of the Development Corporation’s regeneration scheme, whilst also being able to dispose of significant liabilities in respect of the former steelmaking site at an acceptable price.