Friday, July 11, 2014

Pritchards 'Sets The Record Straight'

Former Hereford United non-excutive director Bob Pritchard has spoken about the Edgar Street leases.

With the many assumptions made on the leases and their association with HUFC I think I need to set the record straight and remove the many worries that supporters have.

Having worked on the leases for 12 months in accordance with the heads of terms agreed between the council and the clubs commercial representatives Savills International and club and councils, city solicitors and advisors, Bob Pritchard confirms that the leases were negotiated in a robust way with the due diligence expected of 2 reputable law firms and have been engrossed in this form between the parties, for a period of 30 years with the right to extend them to 250 years should development of either end take place. 
The existing leases were coming to an end in 2020 and in order to comply with FA compliance, leases needed to be extended to cover a period of a minimum of 25 years.
The leases are in the sole name of the tenant Hereford United [1939] Ltd and the terms are only applicable to that tenant and no one else.
They contain various restricted covenants however the key ones are:
That the football club has to be an affiliated  member of the football league.
That the lease is forfeited should the football club be in breach of any covenant however there is a formal notice period to commence such procedures.
The lease is forfeited should the club stop trading and go into liquidation with the leases returning back to the landlord with immediate affec.t
There is a requirement to complete one end of the development within 7 years and then a further 4years respectively or the leases for the development areas 2 and 3 revert back to the council.  
The development land lease must be sold to a developer who pays best value for the site with all profits put into escrow account for the benefit of redeveloping the stadium ends and the refurbishment of the stadium. the developer must produce all costs and project values prior to acceptance to ensure best value is achieved. 
The developer/ football club must apply for FA grant funding to improve the working capital for the projects.
That an assignment of the lease to the developer will only take place on the completion of the development.
This suggested that all supporters should not worry about mis-justice taking place as this is not possible as the leases are for Hereford United [1939] Ltd not Mr Agombars Company or HUST or a phoenix club, only Hereford United can play football at Edger Street under the current lease
It's simple, Hereford United negotiate with a developer, the developer puts a value on the lease land, this is to be approved by council and agreed as best value, planning application is submitted and approval sought,  this value is placed into escrow account for the construction of 2 new stands, FA grant funding application is made, developer enters into contract to carry out development including stadium works, and procures contract with contractor, works completed, draw down from escrow account, assignment of leases to take place and Hereford United have a stadium with capacity for re-entry to the football league in the future
For those that are cynical yes Mr Agombar could be the developer who demonstrates best value however someone like Stanhope on behalf of clients could also. However I can assure you that Stanhope as an example would not be putting any more than the land value into this deal as they have to fund the project estimated at £6million pounds for the Blackfriars end and £2.5 million pounds for the Meadow end and its anticipated that the land value would recover the costs of the construction of the stands at 2 ends estimated at £1.5 million pounds
Whist it would be nice to see some benefit from the development it appears that Mr Agombar is the only one most likely to provide this in some form or another from the rental income achieved from the development which should be close to £400k p/a for the Blackfriars End and £200k p/a from the Meadow End
The objective of the existing board was to see the return from the development land put back into the stadium and the leases were created to do this, I believe this is still possible 
I write this with no involvement, cant believe that no one has asked me on this but just want ensure that we have a football club to support for the coming season being HEREFORD UNITED.