Manston DCO issues: Funding and investors

Manston airport site Photo Paul Wells

Questions and answers over funding, and its sources, form part of the latest submissions to the Planning Inspectorate examination of a Development Consent Order application for the Manston airport site.

The DCO bid is being made by firm RiverOak Strategic Partners with the aim of acquiring the site and creating a cargo hub and associated aviation business.

However, the land is owned by Stone Hill Park which has submitted a planning application to create up to 3,700 homes, business and leisure and associated infrastructure.

The Planning Inspectorate hearings opened in January and are due to conclude in July.

One of the major questions posed has been how the project, which RSP say will cost in the region of £300 million, will be funded.

Previous concerns centred on the use of funding vehicle M.I.O Investments Limited, which holds 90% of shares in the company but is registered in Belize.

Belize will not disclose its banking or fiscal information to any foreign party and has no reporting requirements.

RSP says it is now restructuring and will ditch the Belize connection. The funding source questions were due to be answered by deadline one, January 18 but RSP said due to the restructure it was unable to provide full information but hoped to do so by deadline 3 (February 15). However, most recent submissions show the restructure is still in process.

SHP: ‘Lack of detail’

The Manston airport site Photo Frank Leppard

In its written submission landowner Stone Hill Park says a lack of financial information exists in the DCO application and casts doubt on whether investors would provide capital for a ‘start-up company’ with no prior airport experience.

The submission says: “The lack of detailed and substantiated financial forecasts, and nothing of substance in relation to how the proposed investment could be commercially financed raises significant questions around the financial viability and fundability of the proposal.

“Commercial lenders and equity providers will expect a track record of EBITDA generation to support funding of the business. A reopened Manston Airport would be a start-up business with a material capital investment requirement and no history of profitability.

“Our experience is that commercial debt and equity providers would be unlikely to provide funding to a reopened Manston Airport on a standalone basis without (i) parent company guarantees (from an entity of sufficient financial standing), and (ii) strong evidence of clear contractual volume and revenue commitments from airline users.

Equity

“A further material issue for the RSP proposal is the much higher threshold of information required to satisfy debt or equity providers for a start-up business with no track record of performance or profitability. This is particularly the case where the project sponsor has no demonstrable track record of developing or operating a commercially successful airport business. This lack of experience and credibility is likely to be a major issue for potential debt and/or equity providers.”

SHP say there would need to be high levels of incentivisation to attract commercial operations but this would have a negative impact for raising external debt or equity. Their submission adds: “For the RSP proposal, the requirement to generate positive cashflow is amplified by the requirement to fund and repay the significant initial investment to reopen the airport, as well as future incremental capital investments.”

RSP: ‘£13 million spend to date’

RSP plans

The funding statement submitted on behalf of RSP lays out predicted costs of the project as £100 million for the first phase -updated to £186 million -, with the cost of developing the remaining phases of the project over a 15-year period estimated to be an additional £200 million, i.e. a total of circa £300 million.

It says compensation for the compulsory take over of the Manston airport site would be “no more than £7.5 million.”

RSP’s latest submission says the firm has spent £13million on the project to date.

However, the identity of investors is yet to be revealed with RSP saying names remain confidential. Their submission adds: “It should be noted that one of the reasons for the confidentiality of the identities of the investors above derives from earlier attempts to secure Manston by CPO via the local authority.

“The applicant previously provided detailed letter-headed correspondence from major global financial investors as to their interest in participating in the Manston project. This correspondence found its way into the public domain to the consternation of the authors who had requested that it be treated as commercially sensitive.”

RSP: Investor descriptions

Investor 1. This institutional investor has a global reach in terms of both the ownership of airport infrastructure, and aviation related assets, namely aircraft leasing, engine manufacturing, and avionics technology development. They are joint venture collaborators with all global air frame manufacturers and are conversant and agreeable with the future requirements of airport capacity in the world’s major population centres, particularly the south east of the UK. This investor has in-house assets both on their own balance sheet, but also on a third party assets under management of in excess of $500 billion.

Investor 2. The applicant has had detailed discussions with a publicly listed global infrastructure institution, which owns and operates a number of major airports in Asia, and has co-invested and participated in numerous financings of airports in the US. This particular investor is keenly interested in expanding its presence into the UK and Europe, and has been involved in the evaluation of our development plans for Manston since very early in the process. This entity has a market capitalization in excess of $150 billion.

Investor 3. This investor is a UK based asset management company with annual revenues of almost £3 billion and responsible for over £400 billion on behalf of its clients This investor has a major mandate to diversify and seek to support investments into the development of UK infrastructure, and Manston fits its criteria. They have been tracking the applicant’s progress both with the DCO application and the details of the scale of proposed development at Manston.

 Investor 4. The applicant has had significant ongoing dialogue with this global private family investment entity. This diversified investment vehicle has extensive interests already in airport and strategic infrastructure assets, and again, have been involved in reviewing and advising on our business case and the thesis we have proffered on Manston from very early on in our investment review. This family office has known assets valued in the region of $25 billion.

Investor 5. The applicant has strategic relationships with smaller private groups with extensive specific experience in certain sectors that will have good value to the future success of Manston. These groups have partnered with directors of the applicant previously in other infrastructure investments both in terms of brownfield redevelopment and ground up data centre infrastructure development. One such has executed, in the last three years, the ground up conception, planning approval, construction and delivery, as lead developer, of two major office projects in London with the aggregate value in excess of £700m. One of these projects has since been sold to a major Asian investor for pricing in excess of £330m.

Investor 6. This investor is a global security services group with assets of over £4 billion and annual revenues of £8 billion.” They have expressed a strong interest in participating in the airport project and in investing in fire and security infrastructure.

Experience

RSP disputes that the team have no experience in relation to airport operations, particularly in regard to freight. Their submission says: “Members of the applicant’s team do have extensive experience in relation to the management and operation of freighter cargo, as opposed to belly cargo.

“In particular, the principal of Viscount Aviation was responsible for managing cargo operations at Prestwick Airport prior to the disposal to the Scottish Government, and for Infratil at Manston Airport prior to the sale of the site to Lothian Shelf (718) Limited in 2013.”

RSP says its business plan includes major revenue categories such as cargo handling fees, airside and landside rents, aircraft landing revenues and fuel revenues. Direct costs include personnel handling freight, staffing the control tower, security, fire control, maintenance and passengers operations.

Hearings for the DCO resume on 18, 20, 21 and 22 March.

Coming up: Noise/night flights, jobs and economic impact, freight operation predictions

30 Comments

  1. Does anyone ask where Stonehill Park are getting their money , as I see it they have a 7 million morgage on the company , perhaps the have found a money tree 🌳, the short answer is they have no money !!

  2. I should think Anne Gloag (net worth £1.3 billion) has enough to cover it as opposed to RSP who didn’t have the money to pay access fees to Manston

  3. RSP has been given opportunity after opportunity to come clean about the source of their funding. The DCO can’t progress without clarity because a governmental organisation like the Planning Inspectorate has to be certain that the funds are legitimate. The information provided, to date, does not give this reassurance. I wonder how much longer the Planning Inspectorate will allow this process to continue in the absence of clarity about the funding.

  4. RSP have submitted a very scratchy application with limited information that is clearly being proved to be inaccurate and full of desperate claims in order to try and buy someone’s land at well below market value. They have and are costing Thanet dearly in terms of housing and jobs that the owners SHP CAN provide. They have fooled its supporters who don’t understand commercial reality,

  5. Why not give RSP a chance, what have we to lose, give them, a time limit of 10 years, to get the Airport up and running, I think I would rather have a few planes than 6000 cars polluting cars on Thanet roads.

    • Easy to say when it’s not your property.

      I quite fancy opening a chocolate factory and I’m going to pursue a compulsory purchase on your house to make room for it.

      Of course, I can’t tell you who my investors are or if they have the money to compensate you, that would be confidential. I don’t have any proof the UK needs a chocolate factory in Thanet or that it would be profitable, but I can make a vague, unsubstantiated claims it will definitely create tens of thousands of jobs.
      Why not give me a chance? What have you got to lose?

      Oh and by the way, Thanet has to provide thousands of new homes whether or not the airport reopens. Claiming this is some kind of “houses vs airport” debate is ignorant at best and deliberately misleading at worst.

    • The number of polluting cars in Thanet has nothing to do with the merits or otherwise of RSP’s plans.
      Why on Earth should the Inspector “Give RSP a chance”? It’s not a bit of virgin wilderness that belongs to no one! SHP own it. It’s theirs to do with as they want.
      Your concern over polluting cars is laudable: will you give up yours?

    • How many planes would the Nethercourt residents find acceptable? RSP’s application quotes 83,000 plus as an annual figure.

  6. A balanced and interesting article. I’ve had doubts about RSP from the start. They couldn’t even find the money to pay their survey costs, so how are they going to afford to run a cargo hub? Only in Thanet! Such a shame. We deserve so much better.

    • I think you will find if you check it out ,that this was miss information put out by Stone hill Park , the planning Inspectorate were forced to order Stone Hill Park to give RSP access to Manston , this was there excuse for not doing so.

      • I think you will find that, indeed, the survey costs were not paid by RSP but by another company associated with the struck off solicitor and manager of serial airport failure, Tony Freudman

  7. Why not give RSP a chance.
    This is their chance.Special interest groups have fouled up our Planning system just to give RSP a chance and this is their opportunity to show that a) their scheme is viable and b) they have access to the necessary capital to carry out their scheme.
    I suspect in the current national and international financial climate that might be a bit more difficult than some of us had anticipated, which is why they may find it difficult to convince PINS of their financial bona fides.
    Can I remind everyone it is not aircraft or houses; it is aircraft and houses or houses alone, with the two competing schemes.
    I just wish everyone would stop living on pipe dreams or nostalgia, and allow Ramsgate, Thanet and the UK, to change and become a community where prosperity is for all and not just a tiny minority, and that we become again, the polite nation we once were, based on tolerance and goodwill towards others.

  8. George Nokes exactly how many chances do you think is enough ? Freudmann and co failed to come up with the cash twice as indemnity partners with the TDC CPO saga. They were told by PINS last August they had to come up with credible and legitimate investors and funding for the DCO which they have now failed to do twice. RSP never paid the fees for access to Manston it was another of Freudmanns company’s that paid in the end.

    • Well he might if he could actually find a buyer. Maybe all the uncertainty is putting people off unfortunately for him

  9. Manston site can not support that many houses the drainage and sewage system could not hold that amount it was originally designed for business use only so unless you want sewage in the rivers and sea carry on stone hill .

    • What rubbish. Manston was never “designed” for anything. It was fields. Then an airfield. Then a failed airport.
      There are plans to develop the site. Whether or not sewage pours into the sea depends on the treatment plants at Stonelees and North Foreland – no matter where on Thanet houses are built.
      And an argument against houses is not an argument for an airport!

  10. Why would a company that alleges send of £13M have no money to pay for access to land they want to acquire? Could it be they have no UK bank account because Belize owned companies cannot get past Money Laundering regulations. Just a thought

  11. It really is time this farce was stopped. It’s as clear as can be that RSP are a bunch of cowboy speculators. They have few funds. They don’t know where they can get the funds.

  12. The funding statements are amateur to say the least. How anyone, never mind the Examining Authority, could have faith in this level of hot air promises is a mystery. Thanet needs to to put Manston to bed and meanwhile our council plans to build houses on the green field land because of misplaced nostalgia and zero commitment to regeneration and change. Why would anyone want a dirty old cargo plan 400 feet over our Royal Harbour every 10 minutes. Why? What would justify ruining Ramsgate in this way?

    • I’m going to stop reading all this most people commenting don’t really have a clue most of them are stuck in the past and thats where they want to stay. Yes let’s put it to bed let’s get the airport running. And as for the actual owners they’ve never paid for it.

  13. RSP’s submission for DCO is pitiful. They have missed 3 dead-lines for submitting their funding statement, which is very concerning. Yet the local MPs continue to support this attempted land grab. Should PINS continue to the next stage of the examination on the basis provided so far, it will make them subject to public scrutiny. They have wasted everyones’ times, and local council tax payers’ money over the past few years.

    • To be clear, it’s not PINS that’s wasting our money: it’s RiverOak in its various guises.
      But I agree that on the evidence presented so far, the application should not be allowed to proceed.
      A clincher for me was the revelation that the freight companies listed by Sally Dixon as queuing up to fly from a reopened Manston were shown to be closed, mothballed, bellyhold only or never flown to the UK.
      Enough is enough.

  14. Imagine someone – lets call them, say, “Tony” – wants to buy a house …

    Estate Agent: Do you have proof of funds?
    Tony: No. But several really big and impressive sounding banks said they’d give me a mortgage.
    Estate Agent: Which banks?
    Tony: Can’t tell you. But one of these banks has assets worth £500bn, one bank has assets worth £300bn and another has assets worth £330m. I can keep listing different banks I’ve heard of and how big their assets are, if you like?
    Estate Agent …. Okaaaaay. And how much are these banks letting you borrow?
    Tony: Can’t tell you. Can I have a house please?

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