Wednesday, 01 October 2014

Local authority drops veto rights to enable rescue deal to go ahead

Cheshire council eases way for Cosmopolitan and Sanctuary merger

The local authority that hosts 6,000 homes owned by stricken Cosmopolitan Housing Group has agreed to sacrifice its right to veto constitutional changes to the landlord’s management.

Cheshire West and Chester Council voted last week to give up its so-called ‘golden share’ in Cosmopolitan subsidiary Chester and District Housing Trust in a bid to help a rescue merger. The council inherited its right when the homes transferred to CDHT in 2000.

Council leader Mike Jones said the move was intended to help ease the way for the mooted takeover at Cosmopolitan by Sanctuary Group.

‘We have set out criteria that we hope will enable a deal to be done,’ he added.

Cosmopolitan chief executive John Denny confirmed that the council’s offer ‘represents a step forward’ as it would give Sanctuary control of its assets, but stressed that ‘there is still more work to be done’ before a merger can go ahead.

Negotiations between the two landlords, their lenders and the social housing regulator are continuing.

It is thought a decision on whether or not the deal will take place could be reached before the end of the month, when the next set of payments on leases taken out to fund its student housing business are due to be paid.

CDHT became part of Cosmopolitan through a merger in December 2011. However, last summer the 14,000-home landlord faced a cash-flow crisis and came close to breaching lending agreements after difficulties around the financing of its student housing emerged.

Sanctuary stepped in as a potential merger partner after Riverside walked away from the deal last month, following a due diligence process.

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