Hastings Pier was sold to the bidder most likely to make it a success and secure its long term future.
That’s the message in a document published this week by administrators Smith and Williamson (S&W) that says the pier was sold to the bidder who could, “demonstrate the highest probability of supporting its ongoing trading into the future.”
S&W has revealed this week that they considered five bids for the pier and were still considering fresh offers and bids right up until last Friday when the sale was completed.
“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.”
S&W also point out that all those interested in bidding had, “over six months to work on their proposals.” And they make clear they were unable to delay the sales process further as that would have increased the costs of the administration and risked seeing some bidders withdraw from the process.
Hastings Pier Charity went into administration on November 24th last year when it reached a point where it could no longer pay its creditors.
During the six month administration process the pier continued to operate with its losses – estimated to be around £50,000 per month – being covered by the Heritage Lottery Fund (HLF). If that had not happened administrators point out that the pier would have had to close and staff made redundant as soon as the administration process began.
After marketing the pier a closing date was fixed and interested bidders were asked to submit proposals by April 12th, “The bids are confidential, as is market practice for administration, so that the process achieves the best outcome for creditors,” says S&W.
“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 and their views needed to be taken into account as the largest creditor. Their aim throughout the process was that the heritage asset be sold to the bidder that could demonstrate the highest probability of sustaining it financially into the future, and maintained the benefits for Hastings and the wider community,” says S&W.
Bidders were asked to explain their plans for running the pier and to show demonstrate they had the ability to pay the running costs for operating the business and the to be able to maintain the pier, cost described as ‘significant’ for the future. After April 12th S&W explain that bidders were given time to improve their offers and various discussions took place with people who had expressed an interest.
“…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,” say S&W and the administrators point out, “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.”
While the upfront payments were relatively small this has to be looked at in context alongside the need for future investment, S&W says: “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.”
All that meant that last Friday Sheikh Abid Gulzar was announced as the winning bidder for Hastings Pier: “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,” says S&W.
In the coming weeks the administrators will provide full reports to creditors on the administration that will include the sale process and other related 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,” says S&W.
Writing on behalf of HLF Director of Operations Eilish McGuinness said: “We applaud the efforts of the Friends of Hastings Pier for their fundraising efforts and commitment and passion for the pier, but costs for operating the business and the upkeep of the Pier are involved and significant and further investment is needed to sustain it financially into the future.
“We recognise the emotional connection the community have with the pier, and the important role the community shareholders played in its restoration. We hope that this local community support remains so that that this award-winning pier continues to make a significant impact on the town’s prosperity and culture.”
Perhaps predictably the administrator’s explanations were not well received by members of the Friends of Hastings Pier Facebook group, Cheryl Bell said of it: “What a patronising piece of B.S.”, while Sussie Tullett desribed it as, “…sad, pathetic, patronising, and utterly stupid comment.”