The company behind the proposed £425m Circuit of Wales project, which plans to create a new motorsport racetrack at Blaenau Gwent, has been given a two week deadline to confirm its financial backers.
The project, earmarked for 830-acres of de-registered common land at Ebbw Vale, from Heads of the Valleys Development Company (HoVDC), has been given the deadline by Cabinet Secretary for the Economy and Infrastructure, Ken Skates.
Speaking in a Senedd plenary session Mr Skates told AMs: “The people of Ebbw Vale deserve to know if this project is going to go ahead and crucially if so when.
“I am keen to avoid more opportunity costs associated with the project without a final date.
“Therefore I have written to the Heads of Valleys Development Company today asking them to make faster progress on this project and asking evidence to be provided to me of named investor term sheets within the next two weeks.”
HoVDC will also have to submit a new business plan that not only demonstrates the long-term commercial viability of project, but one that isn’t reliant on any future financial support from the Welsh Government.
Mr Skates, who inherited the project from his predecessor Edwina Hart, rejected a revised plan in the summer which, with the support of the borrowing powers of local authorities Monmouthshire and Blaenau Gwent, was based on a taxpayer guarantee of around 75% of project costs.
He then asked HoVDC to work up a new financial plan that required an underwriting commitment from the Welsh Government of less than 50%.
If agreed a Welsh Government guarantee would be for around £210m of the project’s cost, which would only kick in after the track, which has the rights to stage motorcycling’s MotoGB Rally, is completed.
HoVDC, who remain confident of raising the finance, are in discussions with Aviva Investors with a view to them contributing around £270m, which would repayable over a 35-year period.
The remainder of the funding would come from equity investment and separate debt finance of around £85m. It has appointed corporate advisory firm Kleinwort Benson to front its fund raising efforts.
The latest business plan from HoVDC is expected to rule out the circuit being able to stage Formula 1 at any future point.
HoVDC are confident that the project can develop an automotive cluster around the track, as well as being a major leisure facility.
However, the Welsh Government will not provide any future support, including through the underwritten of major events attracted to the circuit
So far the Welsh Government has provided £9m in financial support to HoVDC.
The Welsh Government said that if a track isn’t deliver it wouldn’t impact on the inward investment projects from luxury car manufacturers TVR and Aston Martin in South Wales.
While, it would be a ‘nice to have’ for customers to take test drives, the investment decisions are not dependent on the track.
Even if the backers are confirmed by HoVDC, the Welsh Government would still have to undertake further due diligence on the project – assessing its long-term viability.
That process would likely take around a month to complete.
The deadline for HoVDC to confirm its backers will come after a report from the Wales Audit Office examining how public money was awarded and spent in connection with the project.