A project to build a motor-racing circuit in south Wales has been forced to go "back to the drawing board" after the Welsh government refused to underwrite the £375M ($527.5M) scheme, according to Brown & Campbell of the FINANCIAL TIMES. Wales Economy Minister Edwina Hart on Thursday said that she would have been "bloody mad" to issue a full guarantee for the Circuit of Wales, bringing an end to months of negotiations. The failure of the development would also stall plans for British luxury car builder TVR "to build a plant next to the international circuit." Hart: "At the end of the day the risk is just too great for me in terms of money and I think Joe Public would think I have gone bloody mad guaranteeing £357M." The scheme was to "build a track, motor technology park and retail and property developments near Ebbw Vale." The promoters claimed it would "transform the economy of the Blaenau Gwent borough, creating 6,000 jobs in an area blighted by unemployment since coal mines closed in the 1980s." The total cost of the project is about £370M ($520.5M). The promoters said that they lined up £350M ($492.3M) "in private finance, with Aviva, the insurance company, the main backer." They "were also looking for government grants and loans" of £32M ($45M) under a public-private partnership. However, Hart said that they had "moved the goalposts" in seeking a full guarantee for its investment. Aventa Capital Partners Dir & Heads of The Valleys Development Company CEO Michael Carrick said, "While this was our clear preference and reflective of the negotiations we have held over the past six months, we accept that the project will need to progress on revised terms" (FT, 4/7).
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TOO MUCH RISK: The SOUTH WALES EVENING POST reported the Welsh Government has "already footed" the £9M ($12.7M) bill for preparatory works and provided a grant of around £16M ($22.5M). The Welsh Government also had been willing to underwrite up to 80% "of the project's capital but it is understood that this was not accepted." Hart said, "In the last few days we have considered that a guarantee of 80 percent of the total value of the project may have reduced our risk to an acceptable level, but the Circuit have not been able to secure any real private risk capital and so this option has not been possible" (
SOUTH WALES EVENING POST, 4/6). The BBC reported Heads of The Valleys Development Company said that "it would try to find a solution." Carrick said, "We will continue negotiations with the Welsh Government, the local authorities and Aviva Investors to advance the development on revised terms that will be acceptable to all parties." Welsh Conservative Leader Andrew RT Davies said, "Clearly the Welsh Government has to be cautious and careful about the money it spends, but it is ironic that in a week where they've asked for the U.K. Government to underwrite the future of the steel industry they're unwilling to back what would be an exciting, flagship scheme." A Plaid Cymru spokesperson said that it was "devastating news" for Blaenau Gwent (
BBC, 4/7).
