The client
Having run as a successful business for over 100 years, Albemarle Shoreham Airport Ltd (known as Brighton City Airport) is one of the oldest commercial airports in the world with over 50,000 aircraft movements annually. The site extends 242 acres, and comprises three runways and a portfolio of property. However, with increasing debt and adverse publicity, following the fatal Shoreham Air show incident in 2015, the estate ran into a number of financial difficulties and Simon Underwood and David Thurgood of Menzies were subsequently appointed as Administrators.
The issues
- The company was struggling to fill the site to capacity, with occupancy levels at an all-time low of just 60%. This subsequently meant that rental income was not sufficient to meet the loan debt, forcing the owners of the airport into default.
- The secured lender was demanding the repayment of its loan, placing increasing pressures on the company to perform. At the same time, the company had to deal with ongoing bank interest charges.
- The 2015 Shoreham Airshow disaster forced the closure of the airport for some time and, understandably, had a significant impact on the income generated by the asset over the following 12 months resulting in no profit being achieved. The incident also severely damaged the airport’s reputation.
The actions
- Since our appointment, we asset managed the estate; carrying out building work to improve two aircraft hangers, as well as refurbishing a number of commercial buildings to make them available for letting.
- We extended the administration by 2 years and 3 months by an application to Court.
- Over 14 months was spent applying for outline planning permission to allow commercial development on the site. This created significant job opportunities for the local community.
- An extension of the lease to 350 years was requested to further improve the asset value, including extending the lease to the airport operator, and to allow the tenants to make worthwhile capital investment in their own facilities. This lease extension has greatly increased job security for all that work on the site.
- Work was carried out to improve signage, landscaping and the visual experience of the airport site as a whole.
- A detailed agreement was entered into with the Environment Agency (EA) to rebuild the sea wall as part of their Adur Tidal Walls Project to lessen the flood risk for the local area. This has now made a significant contribution to the amenities available for the local community and assisted the local authorities in achieving their Adur Local Plan. This project has significantly reduced flood risk for more than 2,300 properties in Shoreham and won the Climate Resilience Project of the Year award at the prestigious British Construction Industry Awards 2019.
- We granted 8 acres of land to the EA to construct a new natural wildlife habitat that was being lost as part of the wider EA scheme.
- To address the sensitivities of the local community in relation to the air disaster, various improvements were made to access the site including new road junctions. A memorial garden was also facilitated.
The outcome
- Despite the impact of the pandemic on the travel industry, we were able to complete the sale.
- Occupancy levels of the estate increased from 60% to 100% – providing the company, and the secured creditor, with a full rent roll.
- At the time of appointment, the value of the asset was considerably less than the debt due to the secured creditor. The sale completed in October 2020 and, thanks to our efforts, the selling price increased by nearly 100%.
- The new natural wildlife habitat is now in place, and the memorial garden has been facilitated on a piece of land that we donated.
An award-winning rescue
We are delighted to have collected an award at the 2021 Turnaround, Restructuring and Insolvency (TRI) Awards for Corporate Rescue of the Year (Medium) for our rescue of Shoreham Airport.
The judge’s comments were as follows:
“Menzies appear to have put a lot of effort into this case, having been appointed for a number of years and carrying out a lot of building work and refurbishment to improve the airport and its facilities. A true success story given, despite the impact of COVID-19 on the travel industry, occupancy levels increased to 100% and the value of the asset increased by 100%, which benefited creditors and the company itself. It is also nice to hear that the creditors and shareholders of the company were not the only beneficiaries – the wildlife habitat and the memorial garden were both very smart ideas and Menzies absolutely did the right thing in making them a necessary element of the rescue.”
