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Luminus selects Places for People as merger partner
Housing association Luminus plans to merge with giant social landlord Places for People as it reaches the conclusion of a turbulent year.
The Huntingdon-based provider has selected the mammoth organisation as its preferred partner for a merger after considering a shortlist of three.
It comes at the end of a year where Luminus was downgraded by the regulator for widespread gas safety issues and later saw its longstanding and enigmatic chief executive Chan Abraham resign.
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It is understood the merger will be completed by February.
Tom Miskell, interim chief executive at Luminus, told Inside Housing: “We had some compelling bids, but we selected [Places for People] because of their experience of going through this process and the financial security they will provide us.”
The news comes ahead of Luminus’ financial results for 2016/17, due to be published later this week, which are expected to include provision for a £47.6m loss resulting from a loan to local house builder Almaren.
In its recently published value for money statement, Luminus says: “Luminus’ investment partner, Almaren, has made significant losses. As a result the board has agreed to make a provision in the financial accounts for 2016/17 for the full amount of the investment (£47.6m).
“Although as much of the investment as possible will be recovered from Almaren, the board rightly took the most prudent course of action.”
This loan is understood to represent the “£48m commercial investment” which the housing regulator criticised Luminus’ board for not properly monitoring when it downgraded the organisation to a non-compliant rating in March.
The £47.6m loan matures in 2036, and Mr Miskell stressed that Luminus still intends to recover what it can of the loan.
Almaren is a house builder in Huntingdon which describes itself as “the Cambridge region’s premium house builder”. It was set up as Luminus Properties in June 2006, before being rebranded.
It is understood they develop housing, including social housing at cost, for Luminus. The company has been contacted for comment.
The value for money statement also revealed an audit of health and safety by consultancy Altair following the regulatory downgrade revealed “non-compliance with numerous elements of cyclical servicing in relation to health and safety”. These are understood to have also included electrical safety failings.
The report said they would be fully resolved by 30 September, at a cost of £2m to the organisation.
It also revealed that as a consequence of significant loans with Canada Life and Nationwide “which are fixed for long periods and at high rates of interest” the associations’ debt per unit is currently £40,785, well above the average of £15,215.
