Urban development construction work

Tender description

On 23.3.2016, CCS entered into a development agreement ("DA") with (i) RDE Silex Limited and (ii) Varsity Halls (Swansea) Limited (the "Developers"). The DA aims at securing the regeneration of a site centred on Mariner Street, Swansea ("the Site") principally via the provision of new student accommodation. The Developers have identified Fusion Global Investments LLP ("Fusion") and/or one or more of its subsidiaries as operator of the student accommodation. Fusion's participation in the development will deliver significant benefits to CCS and its stakeholders. To facilitate Fusion's involvement, a subsidiary of Fusion will purchase the entire issued share capital in each of the Developers (the "Transaction") and CCS and the Developers intend to make a number of non-substantial changes to the DA. The DA includes several conditions precedent which, if not waived/satisfied by 23.3.2018 (the "Unconditionality Long Stop") entitled any party to terminate. No party has done so. Once the DA becomes unconditional ("Unconditionality") CCS will grant the Developers a lease of the Site for a 2 000 000 GBP premium. The Developers will deliver the Development. If practical completion of the works ("PC") is not achieved by a fixed date (the "Overall Long Stop") (currently 23.3.2020) CCS may, subject to conditions, terminate the DA. The DA further provides for overage to CCS if the Developers achieve certain profit margins. One of the conditions precedent is that CCS should have agreed with Network Rail ("NR") to acquire that part of the Site owned, and operated as a car park, by NR (the "NR Land"). The DA envisaged that NR would need replacement parking. When the Transaction occurs, the parties will make the following changes to the DA ("Relevant Changes"):- (i) NR shall agree to sell the NR Land to CCS in return for a lease from CCS of replacement parking (the "MSCP"), completion to occur ("NR Completion") once CCS finishes certain MSCP works; (ii) for 10 years, CCS will guarantee that NR will receive 80 000 GBP annually from the MSCP (equating to CCS's recent earned income from it).The Developers will pay CCS 80 000 GBP p.a from NR Completion (reduced to 40 000 GBP p.a for the period to 30.4.2020 if NR Completion occurs after 30.4.2019) until PC to compensate CCS for this lost income, regardless of what CCS pays to NR. (iii) By NR Completion (a) RDE Silex will procure the transfer to CCS of those parts of the Site known as the High Street properties ("HSP"), completion of which is "DL Completion"; and (b) CCS will allow the Developers to enter the Site and carry out preparatory works from the later of NR Completion and DL Completion ("Site Completion"). Currently, the Developers have no right to occupy until Unconditionality; (iv) CCS will receive a fixed overage payment of 750 000 GBP on PC, in place of the current overage arrangements; (v) the Unconditionality Long Stop shall be 31.12.2019 (or 31.12.2020 if NR Completion occurs after 30.4.2019); if Unconditionality has not occurred by the applicable date (but NR Completion has occurred prior to the applicable date) and CCS terminates the DA the Developers shall pay CCS 2 000 000 GBP; the Developers shall, at their cost, reinstate the Site as though the preparatory works had not occurred; and CCS shall keep the HSP; (vi) the "Target Date for Building" shall be amended from the current 24 months from Unconditionality to 30 months from Site Completion (or 30 months from the date one year after Site Completion if NR Completion occurs after 30.4.2019); (vii) the Overall Long Stop shall be 60 months from Site Completion (or 60 months from the date one year after Site Completion if NR Completion occurs after 30.4.2019); in addition, if PC has not occurred within 48 months of Site Completion (or 48 months from the date one year after Site Completion if NR Completion occurs after 30.4.2019), the Developers will pay CCS the lease premium and the fixed overage payment on a non-refundable basis; (viii) if PC has not occurred by the new Overall Long Stop, CCS may terminate the DA unless the parties agree, or an expert decides, on a final 2,5 year extension (ie to the date 90 months from Site Completion (or 90 months from the date one year after Site Completion if NR Completion occurs after 30.4.2019)) whereafter CCS may terminate the DA at any time regardless of the circumstances; (ix) the Developers shall not be required to tender the building contract but will conclude it as soon as possible after Site Completion, rather than on Unconditionality as currently stated; (x) under the lease, the retail space permitted user shall be relaxed after 10 years from A1/A3 to include A2/B1/D2, together with minor additional updating changes.