THE government has signed a £1.3 million bail-out to stop the debt-ridden Sefton Group going under.
Some £3.2 million of taxpayers’ cash is also being used to buy the landmark Middlemarch site in Lord Street off the struggling company with a view to it leasing it back over the next five years.
Chief Minister Allan Bell defended the government’s intervention, insisting it was justified given the scale of the Sefton Group’s role in the local economy.
‘There will be questions about the deal, naturally, but I believe it is the right and responsible thing to do in the circumstances,’ he said.
The Group, which includes the Sefton and Palace hotels and the building firm Parkinson’s, employs 300 people in tourism, leisure and construction and spends £7.3 million a year in the island’s economy on wages and suppliers.
Shares in the company were suspended this morning following the announcement of the deal which was signed last night. Trading on the Stock Exchange will resume on Monday.
The company has been involved in a comprehensive debt reduction programme since new management took over in 2010 following the departure of chief executive and director Graham Ferguson Lacey. Debts have fallen from a high of £96 million in early 2010 to the current level of £24 million.
Mr Bell said: ‘Government had a clear choice - to sit back and allow the Sefton recovery programme to falter at a time when the domestic economy is already vulnerable, or play a small but decisive part in bringing that to fruition. We have a duty to support the economy, and that includes assisting business recovery when a favourable outcome can be demonstrated.’
Repayable over five years, the £1.3 million is coming out of the economic development fund while the £3.2 million for the purchase of the Middlemarch site is coming from the Treasury’s land acquisition reserve.
In a statement to shareholders, Sefton Group chairman Sir Miles Walker described the deal as ‘major milestone’ that will be ‘undoubtedly transformational’.
