'Business as usual' for City Sentral firm despite £24m debts
THE private firm behind the city's planned £350 million City Sentral shopping complex has debts of more than £24 million.
Independent auditors say there is 'significant doubt' over whether Realis Estates can continue without threat of liquidation.
The Birmingham-based firm made losses of £11 million last year.
Its debts of £24.2 million are payable on demand – meaning creditors can request repayment at any point.
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The company's liabilities outstrip the total value of its assets by £15.3 million.
Figures are revealed in the company's newly-published accounts for 2011.
Auditors say the level of debts 'indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern'.
The company's debts have this month been sold by Lloyds Bank to Oaktree Capital.
Realis said the debt sale should not affect its financial situation and it is in talks with the Oaktree Capital over repayment.
In a statement, the firm said: "The fact is that regardless of what the accounts say, as previously stated, we continue to invest heavily in progressing City Sentral."
Nobody at Stoke-on-Trent City Council, which is promoting the shopping centre as evidence of its 'Mandate for Change' regeneration plans, was prepared to comment on the auditors' findings.
But the authority indicated its officers are in contact with the company and have full confidence over its solvency.
Opposition leader and independent councillor Dave Conway said: "We need explanations. The council promotes this shopping centre in all of its promotional literature but as soon as it looks like bad news, they don't want to know.
"I have big concerns. You don't need to be an economist or anything like that. It is written there in black and white."
As well as funding about a third of the city council's new Hanley bus station, Realis is expected to deliver a giant shopping complex on the site of the former East West precinct.
City Sentral, which is due to open in 2015, is planned to provide 80 shops and restaurants, a multiplex cinema, an 80-bedroom hotel and 1,000 parking spaces.
It is considered the centrepiece of ambitious plans to transform the city centre.
The Sentinel can also reveal that an unknown party has had part of the land on which City Sentral is due to be built independently valued.
Property consultant Lambert Smith Hampton inspected the site and produced valuation documents over the summer.
Duncan Mathieson, managing director of Realis Estates, denied enlisting the consultant and said Realis 'has no intention' of selling the land.
Mr Mathieson said the audit report offered only a 'snapshot' as the City Sentral project progresses: "The plan remains as it has been since we took out the loans – to repay the debt.
"We have already met with Oaktree. In the meantime, it is business as usual.
"In the current economic climate, it would be difficult to find an auditor's report on a special purpose vehicle in property development that didn't include a caveat of this sort.
"The valuation of the asset can only be a snapshot of the position at a specific moment in time and, with a development such as City Sentral which is moving forward all the time, is therefore rather fluid."