FORTH Ports has been forced to renegotiate its financing for Ocean Terminal in Edinburgh after its plunging value threatened its agreement with lenders.
It sought a new deal from banker HBOS to avoid breaching terms governing the maximum loan-to-value ratio for the centre, which is at the heart of a £700m redevelopment scheme for Leith Docks.
The firm warned investors yesterday that since it last reported to the market at the end of October, "there has been a further significant and much-publicised deterioration in market conditions which will affect the year-end market value of our property assets".
It added: "The deterioration in market conditions and yields will affect the valuation of our interest in Ocean Terminal which will, in turn, affect Ocean Terminal's specific loan-to-value ratio. We have, however, agreed in principle with HBOS a refinancing solution for Ocean Terminal."
Forth Ports maintained yesterday that it remained confident about the shopping and entertainment centre's long-term prospects and said it that an expansion of the centre is envisaged in its £700m development scheme for Leith Docks, detailed plans for which were unveiled earlier this month.
Under the plans Ocean Terminal will be extended to the front and the rear and visitors will be given access to the water's edge.
The firm said other development sites along the five-mile stretch of coast encompassing Leith Docks, Granton Harbour and Western Harbour could also face writedowns but it expected the market value of the overall portfolio to be no less than their carrying value on Forth Ports' books.
It added that it would significantly reduce spending on property in an effort to protect the firm's revenues during the downturn.
Forth Ports first began regenerating the waterfront in the 1980s and Ocean Terminal was opened in 2001.
Despite the pressures on its property book the company, which operates Dundee, Leith, Grangemouth, Rosyth, Methil and Burntisland ports as well as Tilbury in the Thames, maintained that its underlying pre-tax profit would be in line with market expectations. Analysts are predicting a rise in pre-tax profit, before exceptional items, to £37m this year.
The company said underlying trading within its ports division is "showing a good level of growth".
Forth Ports said it had arranged new banking facilities for the business of £275m, of which £25m expires in June 2010 with the balance running until June 2012. It said net debt at the end of 2008 is expected to be £210m.
Click here to comment on this story...
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article