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Lloyds Bank closing in on deal to buy NEC Group for £300m

Lloyds Bank closing in on deal to buy NEC Group for £300m

🕔13.Jan 2015

Birmingham city council is expected to signal this week its intention to sell the NEC Group to the investment arm of Lloyds Bank for about £300 million, Chamberlain Files understands.

The long-awaited decision means that ownership of the city’s prized leisure assets including the National Exhibition Centre, the Genting Arena, the International Convention Centre, Symphony Hall, the National Indoor Arena and the Town Hall will pass out of council control for the first time.

A national ticketing agency, the Ticket Factory, hospitality brand Amplify, and caterer Amadeus will also be part of the sale.

The money raised will be used to help pay off a £1.1 billion equal pay compensation bill to thousands of current and former female council staff who successfully took legal action after they were underpaid compared to men performing similar roles.

It is unclear whether the council will retain any shareholding in the NEC Group.

However, the freehold of the various leisure-related sites will remain in council hands.

The new owners, expected to be Lloyds Bank private equity firm LDC, will be expected to invest heavily in bringing up to date and improving the NEC Group buildings as well as providing risk capital to promote the NEC expertise globally.

News of the pending sale leaked out via Sky News, much to the council’s embarrassment and has been carried in other media outlets.

A special city cabinet meeting will be held first thing on Thursday to rubber-stamp the sale, but the meeting will be in private. It’s thought that the council will then confirm the sale within days.

The council is refusing to comment or speculate on the identity of the purchaser.

However, Chamberlain Files understands the Sky News story to be substantially correct.

A move to dispose of the NEC Group was announced to the controlling Labour group by council leader Sir Albert Bore in 2013. By January 2014 it was confirmed that a sale was on the horizon.

Then in March 2014 the council confirmed at a media briefing it was moving to dispose of the NEC Group and hoped to sign off a deal by the end of the year.

Sir Albert Bore described the decision to sell as “historic”.

He admitted a “tinge of sadness” but added that a new owner would be able to provide the investment required to make the NEC a “global brand” with an exciting future.

Sir Albert added: “Privatisation has been a feature of economic life in the UK for many years and the decision we have taken is consistent with that trend and an acknowledgement of the fact that businesses like the NEC get to the stage where it is better for them to be in the private sector.

“An appetite for investment and risk is required that is beyond what is appropriate for the city council.”

The purchasers of the NEC Group are likely to be offered a 100-year lease for the National Exhibition Centre and shorter 25-year leases for the Birmingham city centre International Convention Centre and National Indoor Arena.

The purchaser will also have to agree to keep the NEC buildings for their current uses to “secure the profile of Birmingham and the West Midlands as a world class home of a broad array of live events”.

The council also intends to retain claw-back rights over certain land at the main NEC site in a bid to ensure it preserves potential future development value.

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