ExCel, the UK £240 million conference centre that opened in east London last year, needs additional funds from its investors if it is to survive, its founder and chief executive has admitted.
Iain Shearer said that share holders, which include media groups Reed and United Business Media, are prepared to contribute more equity investment, which is necessary if ExCel is to avoid defaulting on its UKpound 175 million of bonds.
“We have been supported by our major shareholders to date and there are compelling reasons why they will continue to support the company,” he said.
Reed and UBM each own 13 percent of ExCel, with Malaysian property developer Tan Sri Lee Kim Yew owning 45 percent and the remainder controlled by Sir Robert McAlpine and English Partnerships.
The two media investors` own conferences account for about 40 percent of the centre`s turnover. Both declined to comment on future financial commitments.
Last week, credit rating agency Fitch said “default of some kind appears probable” unless new equity is raised. ExCel has already received a further UKpound 20 million of equity from investors, which will help to cover the centre`s UKpound 13 million interest bill, but will need further investment to survive.
Since opening last November, the centre has hosted 120 major exhibitions and 180 corporate events, said Shearer. But its profits have been disappointing and Fitch estimates that ExCel is now likely to have total earnings before interest, tax, depreciation and amortisation of UKpound 24 million in its first four years, rather than the UKpound 103 million it forecast when it sold its bonds last year.
ExCel has been praised for its excellent transport links, but the perception is that it is on the edge of London. Shearer said several developers are still committed to building up facilities.