Birmingham City Council has announced that it has entered into a binding agreement for the sale of the NEC Group to LDC, the private equity arm of Lloyds Banking Group.
According to the group, the transaction maximises proceeds for Birmingham City Council and is consistent with the council’s vision and strategic ambitions for the NEC Group and the wider regional development. LDC is providing the equity funding for the acquisition, with the provision of debt being led by Macquarie Bank.
The transaction values the NEC Group at around £307m, £15m of which will be in the form of a loan note, including the value of the leases of the Hilton Metropole and Crowne Plaza hotels on the NEC site which are being retained by the Council.
The sale encompasses all NEC Group businesses, with the Council providing a 125-year leasehold interest in the NEC site (including the NEC Exhibition halls, The Genting Arena - formerly the LG Arena - and the Resorts World development), and 25-year leasehold interests in the International Convention Centre (ICC) and Barclaycard Arena (formerly the National Indoor Arena). Birmingham City Council is retaining the freehold of all the NEC sites. The transaction also protects the existing uses of all venues as well as Symphony Hall.
Birmingham City Council has retained a right to claw back certain non-core land at the NEC site for future development. The transaction does not include various plots of undeveloped land adjacent to the NEC site (primarily east of the M42), which will be retained by Birmingham City Council.
NEC’s defined benefit pension schemes, which have been closed to the accrual of future benefits since 2010, will be retained by and benefit from the continued financial support of Birmingham City Council. The sale of the NEC Group and the transfer of the schemes do not have any impact on the benefits payable to members under these schemes.
Sir Albert Bore, leader of Birmingham City Council, says: “The announcement of a new owner is a landmark moment in the history and development of the NEC Group and its three operating sites – NEC, ICC and Barclaycard Arena. We are very pleased to have attracted a Birmingham-based buyer in LDC that understands the local importance of the NEC and shares our vision for the future. This will ensure that the business goes from strength to strength, and that the NEC continues to play a leading role in the wider economic development of the region whilst securing Birmingham and the wider West Midlands’ position as the home for outstanding live events. We are looking forward to working alongside LDC to achieve this goal.”
Last week saw the debut of the January Furniture Show take place at the venue.