Circuit Of Wales Gets Green Light To Develop $417M Racetrack (5th Update)
|Circuit of Wales|
UPDATE #5 A major blow has been dealt to the Circuit of Wales project after the Welsh Government turned down a request for more than £200 million in public funding guarantees.
Circuit of Wales officials, following several setbacks, submitted a fresh financial proposal to the Welsh Government earlier this year, with an extensive period of due diligence undertaken.
But on Tuesday, Ken Skates, Cabinet Secretary for Economy and Infrastructure, released a written statement confirming that the government had rejected the plea.
"In February 2017, Circuit of Wales Ltd submitted its new proposal to Welsh Government, which was followed by a formal application in April 2017 requesting that we enter into a guarantee of a loan facility of £210million provided by Aviva Investors," Skates said of the £433m project.
"This would create a long term annual expenditure liability to Welsh Government if the Circuit was to fail and the lender called in that guarantee.
"Extensive and detailed due diligence by external experts employed by Welsh Government has shown that due to the way the deal is structured, the current proposal would see the Welsh Government exposed to more than 50 per cent of the risk.
"This is because the £210m underwriting element would carry a higher risk than other parts of the financing package.
"As a result, following discussions with ONS (Office for National Statistics) and HM Treasury during the due diligence process, it is assessed that there is a very significant risk that the full £373 million debt of the entire Circuit of Wales project would be classified against Welsh Government capital spending.
"Over the next three years, this would have the same impact on Welsh Government budgets as if we had already spent the money, and would place a significant limit on our ability to deliver current and future projects to improve Welsh infrastructure, housing, hospitals or schools.
"With our current limited borrowing ability, Cabinet therefore today decided that the potential impact on the public finances of the current proposal before them was too great, when considering the many other priorities for the public purse, and decided that the Welsh Government is unable to offer the financial guarantee requested on this proposal."
Skates revealed that the Welsh Government will now commit to building a new automotive technology business park in Ebbw Vale, with funding of £100million over 10 years.
"This is a standalone project to be delivered by the Welsh Government and local partners as the due diligence process demonstrated there is historically little evidence on an international scale of any track, on its own, acting as a catalyst for further local employment," he commented.
The Welsh Government's alternative plan has the potential to support 1,500 FTE (full-time-equivalent) jobs, with Skates describing CoW's estimate of 6,000 as "significantly overstated", due diligence carried out indicating that there would be "little over 100" by 2024.
CoW had signed a five-year deal to host MotoGP's British round between 2015 and 2019, but Silverstone stepped up amid the troubles, and is keen to retain its spot.
07/11/13 Michael Carrick, chief executive of developers the Heads of the Valleys Development Company, pledged to "deliver a truly innovative and sustainable business, helping to deliver long term economic and social benefits for the region".
He said: "It is a hugely important development, not just for the regeneration of Blaenau Gwent but also for the UK economy, and will enable significant private capital to be mobilized.
"This is a showcase for a new type of investment model, a partnership between private investment and government to deliver a transformational business to the region."
A £2m loan from the Welsh government has been made and the developers are trying to secure more public money.
The rest of the money is being borrowed from banks with the intention to raise £150m from institutional investors such as pension funds which would become part owners of the track.
Despite some environmental concerns, the scheme occupying 335 hectares (830 acres) was recommended for approval by council officials before councilors gave it their approval.
Gwent Wildlife Trust, Brecon Beacons National Park, and Natural Resources Wales objected to the plan.
Meanwhile, the Association of Motor Racing Circuit Owners (AMRCO) said the track would harm motorsport.
Jonathan Palmer, chairman of AMRCO which represents 17 UK race tracks, said: "The UK circuit industry welcomes innovation and investment, however history and experience suggest that an investment of this magnitude in a motor racing circuit will never produce a return for investors.
"It is a real concern that this will turn into a white elephant at the expense of much needed public funds, and we hope this project will now be subject to careful scrutiny by Welsh government inspectors and the Wales Audit Office."
In response, a spokesman for the Circuit of Wales said: “It’s no surprise that we are seen as a competitive threat to many of the existing sites that we have in the UK.
"Over the course of the last three years we have met with senior management of 11 of the 17 circuit owners, many of whom have input into our business plan and several operators who have expressed interest in providing services to the circuit."
Welsh government inspectors are still considering whether to review the project. BBC News Wales
07/10/13 In Cardiff, Liam Moffett reported the scheme "had been met with opposition amid concerns about the environment." Among them was the Open Spaces Society, which "expressed concern about the circuit damaging common land on the edge of the Brecon Beacons National Park." Environmental watchdog Natural Resources Wales said the scale of the circuit would have “unacceptable environmental impacts,” including impacts on the special qualities of the protected landscape. During a full meeting, Blaenau Gwent Council members "granted outline planning approval." It means that HVDC will now "have to go away and draw up more detailed plans before the scheme can get the final rubber stamp." Wales Online
07/10/13 The PA's Benjamin Wright reported that a track spokesperson said, ''The heart of the 830-acre complex will be a state-of-the-art motor sport facility, certified to host national and international motor sport events, with a 3.5-mile track taking advantage of the unique topography of Ebbw Vale. As well as being the U.K.'s first high-tech low-carbon motor racing facility, it will act as a business hub for global automotive companies and represent high-technology excellence.'' Officials also said that the "proposed development included an academy to develop young drivers as well as helping regenerate one of the poorest parts of Wales." PA
07/10/13 The biggest new motor racing development in Britain "has been given the go-ahead with hugely ambitious targets" to earn £50M ($74.6M) a year, according to Kevin Eason of the LONDON TIMES.
Outline planning permission "has been rubber-stamped" for a £280M ($417M) development that will have a 3.5-mile circuit set in Ebbw Vale in South Wales. The development "is a partnership between government and a private investor and the claims for its future are huge."
The Circuit of Wales will create up to 6,000 full-time jobs and attract 750,000 visitors annually "hosting national and international motor racing events, it is said, as well as becoming a hub for motor industry research and education."
Optimism "is running high for the success of the circuit when it opens" toward the end of '15 or early '16. However, an economic downturn and a sport struggling to generate interest and entries "must place a question mark over the ambition of a project on this scale."
Britain already has two full-scale circuit complexes, at Silverstone and Donington, with many more smaller circuits, such as Croft in the north of England, Snetterton in Norfolk and the "charismatic" Brands Hatch in Kent. London Times
|Planned Circuit of Wales|
Plans were unveiled Wednesday "for a $404M Circuit of Wales near Ebbw Vale," according to Tom Cary of the London TELEGRAPH. FCC Construccion, the Spanish firm behind the tracks in Jerez and Valencia, Spain and local company Alun Griffiths Ltd. "have been appointed to deliver a mountaintop 3.5-mile circuit," built to motorsports governing body FIA and motorcycle governing body FIM standards, near the Brecon Beacons National Park in South Wales.
While F1 "has not yet been mentioned," the Heads of the Valleys Development Company released a statement that said the Circuit of Wales will be designed to host "international events such as MotoGP, World Superbikes, World Motocross, IndyCar and World Touring Car."
If the plans become reality it would threaten Silverstone racetrack's control of elite motorsport events in the U.K. The statement added that a contractual agreement with the construction partners would ensure that a "significant number" of building jobs would go to local workers. The touted figure of £250M "would likely be the largest lump sum ever spent on a racing circuit in the U.K." TELEGRAPH