Park First Statement: 15 November 2019
Park First recently wrote to all our investors and creditors in a statement on our website about the Gatwick and Glasgow car parking businesses (the “October Statement”).
This was in light of the ongoing administrations of Park First Freeholds Limited, Park First Glasgow Rentals Limited, Park First Gatwick Rentals Limited, Help Me Park Gatwick Limited (together the “Companies”) and in respect of certain ongoing matters which we address in this letter.
Group First Global Limited (“Group First”) is now writing to you to confirm our intentions to issue a restructuring proposal for the Park First Group. This will be issued as soon as possible for the benefit of all investors and creditors of the Companies, in the following categories:
- Investors and creditors who have chosen the Buyback option
- Investors and creditors who have chosen the Lifetime lease option
We believe that it is in the investors’ and creditors’ interests to resolve these matters quickly and allow for the ongoing operation of the car parks. A substantial financial contribution will be made as part of this restructuring proposal. This will provide certainty and stability to your investment and the car parking businesses.
The Joint Administrators of the Companies, who are from Smith & Williamson LLP will have communicated with you separately. They are obliged to continue their work independently of any proposal from Group First.
Group First is the shareholder of the Park First Group and the Companies. This means we have an ongoing interest in the car parking businesses succeeding in the same way that the investors and creditors do. We are supportive of the businesses and believe there is a proposed path forward.
2017 Investment Changes
- In 2017 the Park First Group agreed to restructure the car parking schemes at Glasgow and Gatwick. We wrote to you as our investors and creditors to seek approval for these changes and asked you to select between the new lifetime lease car park investment or a Buy Back opportunity for early redemption.
- These changes were necessary to ensure that the Financial Conduct Authority (“FCA”) was able to confirm that the restructured lifetime lease arrangement offered to all our investors was not in danger of being a collective investment scheme.
- The changes that resulted from the FCA’s request for certain structural changes have, in our view, negatively impacted on the commercial operation of those car parking businesses and caused higher costs and instability for the businesses and uncertainty for the investors.
What action have we taken?
We have complied with the new 2017 investment arrangements.
As part of the business restructuring in 2017, two of the Companies (which own the freeholds to the Glasgow and Gatwick car parks) assumed liabilities to repay certain investors who opted for their money back (the Buy Back investors/creditors). These liabilities were never part of the original business model of those two Companies.
Accordingly, over the course of this year, it has become clear to Group First that a second restructuring of the car parking schemes is necessary.
Companies within the Group First Group have worked to raise funds to promote a restructuring proposal.
What is Group First’s Restructuring Proposal?
We are finalising our restructuring proposal. Full information will be provided about the current position and our future plans and proposals. This can only be achieved if the administrations of the Companies continue.
Our core proposal involves:
- The continuation of the car parking businesses.
- The preservation of investors’ interests in the car parks.
- Resumption of payments to all investors for their historic and future rent.
- Settlement of the amounts owed to investors who have indicated their desire for a refund of their investment under the Buy Back proposal made in 2017, and
- Further contributions to the car parking businesses which will enhance the value of the investments and further protect investors’ interests.
That proposal will allow us to make a significant financial contribution to the car park businesses of circa £33million (gross) via a formal restructuring process known as a Company Voluntary Arrangement (“CVA”). As part of a later vote on the CVA proposal, creditors will be asked to decide whether to accept this restructuring proposal, or reject it, and therefore creditors have complete control over that process.
The financial contributions intended to be made available will be used to fund the development of the proposal and to address claims of Buy Back Investors and the interests of Lifetime Lease Investors. These significant financial contributions are assets which would not otherwise be available, save for in complex, lengthy and risky litigation scenarios, to propose and reach an effective agreement on a restructuring proposal for the businesses.
What would liquidation mean?
A liquidation of the Companies is not an option that we support. This would lead to ongoing uncertainty and value destruction of your investments. In any liquidation process it is likely that:
- The car parks would cease to operate and thus cease to generate revenue which currently is available for distribution to creditors and investors.
- The liquidators of the Rental companies would very likely have to disclaim the lease agreements which exist between the Rental companies and the Lifetime Lease investors, as onerous leases.
- The purpose of the liquidation would be to (1) seek a sale of those assets as quickly as possible without preserving their current value or enhancing their value and/or (2) potentially embarking on complex, lengthy and risky litigation scenarios which would have totally unknown outcomes.
- A sale to a new buyer of the freehold car park interests, the financial outcome from which may be very uncertain given the arrangements in place with investors who under the lifetime lease have ownership rights in each of the car parks. It would then be for the new buyer to contact you to explore what future contractual and commercial relationship they would have with you.
- Any payment to investors through the liquidation could be significantly less than the value you paid for your investment
- There would be no likely option for the continuation of the lifetime lease (which, as stated above, would almost certainly be disclaimed), the continued payment of rental and the ability for an investor to sell their investment over time, and
- The lifetime lease members may, very likely, end up with personal rates liabilities.
For all these reasons and many others, we do not feel that this liquidation option is an option that creditors and/or investors should be considering today.
The liquidation would prevent us from being able to offer you an alternative restructuring proposal, which we believe will offer significant advantages to any liquidation.
What are the Alternatives?
Park First and Group First believe that we have acted responsibly in working to put forward these restructuring proposals to you.
This will allow our investors to consider a recovery in a clear and defined time period – and end the uncertainty and protracted timelines for any other process.
The first procedural matter ahead of any restructuring proposal is the creditors’ meetings for the Companies in administration. These meetings will resume on 25 November 2019.
We advise you to check your communications and/or otherwise make contact with the Joint Administrators regarding this step.
The acceptance of the administration proposals as regards those Companies’ meetings is important.
- It will enable the further work of the Joint Administrators to be carried out.
- It will allow time for a full and fair assessment of all the options available to investors and creditors in the future, and
- It is not a vote on any CVA proposal which will only be proposed if the administrations continue i.e. in the event that the administration proposals are accepted on 25 November and the proposed Modifications to the administration proposals are not.
We support the Joint Administrators’ wide ranging proposals that give them the freedom to consider all the options available to investors, including any CVA proposal for the Companies.
The Joint Administrators are not bound to recommend a CVA. They will only do so it if they think that it is, after independent assessment, in the best interests of all investors and creditors. We believe that we can demonstrate to the administrators that this will be the case as regards the proposed CVAs but we realise that they are independent officers of the court and will only propose the CVAs we would like them to propose if they feel they are in the best interests of the creditors and investors of the Companies.
Are there other proceedings and what is their impact?
It is a relevant fact that certain creditors have commenced legal proceedings. Investors may already have received communications in relation to those proceedings.
Park First has been liaising with the FCA about the car parking businesses for a number of years and was, therefore, surprised at the FCA’s legal actions at this critical juncture. These proceedings are, in Park First’s view, unnecessary and highly disruptive of our efforts to ensure that the car parking schemes are appropriately restructured.
- Park First will vigorously defend all legal proceedings brought against it by the FCA and by investors.
- Park First does not consider that it has acted improperly in any way, and
- Whilst acknowledging that the FCA must act in a manner that it deems appropriate, Park First will defend the FCA’s proceedings fully. However, Park First believes that it will be able to reach an accord with the FCA.
Litigation of matters such as the actions currently contemplated is both time consuming and expensive. We therefore are working hard on developing and launching our CVA proposals, including through the distribution of additional funds to creditors through the CVA. We believe that this alternative is in the interests of all parties and will lead to the best economic returns for the creditors and the investors of the Companies.
We are hoping that the administrators will see our CVA proposals as being in the best interests of the creditors and the investors of the Companies and that they will incorporate them into CVA proposals which they will themselves present to the creditors and the investors.
We hope this letter explains why we are working towards a comprehensive restructuring proposal which:
- Keeps the car parking businesses open;
- Allows investors the maximum opportunity to have their investment returned over time; and
- Preserves the value in those car parking businesses for the benefit of you as investors.
We strongly encourage all creditors and investors of the Companies to review the materials which have been circulated by the Joint Administrators and to participate in the meeting process on 25 November 2019.
For and on behalf of Group First Global Limited