Clarke Osborne and Pontins Buyout (2008)
Posted: 26 Apr 2017, 20:41
Got bored this evening and did a bit of digging and what did I find out, apparently Clarke Osborne was involved in the buyout at Pontins back in 2008. This guy really gets around. Guess what his role was? 'Property Director' (http://www.bighospitality.co.uk/Busines ... ew-Company) All of the below is my conjecture from what I've discovered but it makes a lot of sense and follows a lot of patterns we've seen else. I don't claim it to be true, merely the start of a discussion based upon my perception and some new information on who we're dealing with here.
For anyone who doesn't remember Pontins, beyond the site in Torquay, it was struggling mightily back in the later part of the 00s as package holidays and it's reputation as a poor man's Butlins were steadily killing it (http://www.dailymail.co.uk/travel/artic ... rator.html)
What it did possess was seven large sites across the country, already used for quasi-residential purposes. Looking from an ongoing business perspective Pontins was hardly an attractive prospect, it offered a style of holiday that experienced it's heyday decades before and had a poor brand name. About the only asset of any value that it possessed was it's holiday parks and their extensive residential buildings, which were in poor condition but could be improved. Although from my investigation the land they were built on seems to have been owned mainly by Northern Trust with Pontins leasing them, if Ocean Parcs (the vehicle for the buyout) could achieve long term leases then they could make something out of this large stock of property.
Working alongside Osborne in the buy out were people like Graham Parr, who had worked for Pontins in better days and intimately knew the company, he must have known that it was dying a slow death and would have been well aware of it's property across the country. Parr lead the buy out and is quoted below, obviously stating the property angle of the deal:
Unfortunately for Parr, Osborne and co this deal went through in March 2008, just weeks after the Northern Rock bank run and about six months later the Credit Crunch hit. In September 2008 Lehman Brothers declared bankruptcy, in early October the British government had to rescue the Royal Bank of Scotland and forced HBOS and Lloyds to merge to rescue HBOS' dire situation. As the economy unravelled suddenly people didn't want to buy holiday resort property as an investment and the logic behind the investment collapsed. Although ironically the tightening of household budgets meant that demand for cheap British holidays - Pontin's actual business -increased.
Within a year Pontins had closed down their Hemsby and Blackpool sites. Hemsby apparently because they only possessed a short term lease (http://www.eadt.co.uk/news/pontins-pull ... y-1-169437) and as such it made their investments uneconomic, aka they couldn't sell off the property on the park given the short lease, even if the economic situation did improve. Furthermore it wasn't attracting enough visitors to pay it's way in the short term, so it got the chop. A few months later the Blackpool site faced the same fate. While I can't find any evidence about Pontin's leases outside of Hemsby and Blackpool, I wouldn't be surprised if they were much longer leases and Ocean Parcs intended on trying to ride out the economic storm with this portfolio - had Blackpool/Hemsby possessed a long term leases or were paying their way I doubt they would have been closed - if there's anything we know about Osborne is that he's prepared to play the long game to get his property (Poole/Swindon). The rest of the sites were retained and were run off minimal investment, based upon the income they were providing, does this sound similar to the last five months at Plainmoor?
By 2010, a promised £50m five year investment across the sites was failing to emerge with bits and bobs done here and there but nothing like what was promoted, plus a £100m promised redevelopment of Southport announced at the time of the buyout had failed to emerge ( http://www.southportvisiter.co.uk/news/ ... nt-6619507) at least judging from this article (http://www.liverpoolecho.co.uk/news/liv ... t-12867248 - it doesn't seem to be a park that had £100m invested only 6 years previous). This sounds eerily similar to GI's failed promises at Swindon et al - come in with a wave of promotion and promising big things and deliver very little.
By the end of 2010 Ocean Parcs had gone into admin. Parr claimed it was because of the recession but 'staycations' at cheap British locations had actually benefited from the recession as previously mentioned. He also claimed it was because of their bank withdrawing financial support but other sources stated very bluntly that it was in fact the management of Ocean Parcs which placed it into administration as a business decision (http://www.bbc.co.uk/news/business-11748317). While I can't comment definitively what the reasons for it were, should we not consider the potential that Parr and Osborne's property gamble had collapsed as a result of the Credit Crunch and they were beating a hasty retreat, putting the company into admin to avoid having to invest any more money (or indeed the promised money)? Pontins nearly died as a result and were saved by another buyout in 2011 but are still largely as crap as ever.
If what I conjecture is true, this is yet another example of Clarke Osborne's modus operandi. Identify a struggling company that possesses land or at minimum a long term lease upon land or assets which represent a viable bit of property speculation. Then promise the world to the public to sell your project. Run the existing company in the interim with minimal investment, promising big things and wait for the opportune moment to exploit the commercial potential of the property. If the local council is dumb enough to let you start a housing development before you deliver on a new stadium then all the better. Once you've made your money on the property, find a way out either through selling off the original company to another mug or through admin blamed upon other factors.
Food for thought. You may think I'm mad. I think this little story, even with my conjecture displays numerous similar elements with Osborne's other business ventures. Of course Osborne might have just gone into Pontins to help a friend but given his total lack of experience in the hospitality industry and his job title as 'Property Director' that does seem a little strange to me :}
For anyone who doesn't remember Pontins, beyond the site in Torquay, it was struggling mightily back in the later part of the 00s as package holidays and it's reputation as a poor man's Butlins were steadily killing it (http://www.dailymail.co.uk/travel/artic ... rator.html)
What it did possess was seven large sites across the country, already used for quasi-residential purposes. Looking from an ongoing business perspective Pontins was hardly an attractive prospect, it offered a style of holiday that experienced it's heyday decades before and had a poor brand name. About the only asset of any value that it possessed was it's holiday parks and their extensive residential buildings, which were in poor condition but could be improved. Although from my investigation the land they were built on seems to have been owned mainly by Northern Trust with Pontins leasing them, if Ocean Parcs (the vehicle for the buyout) could achieve long term leases then they could make something out of this large stock of property.
Working alongside Osborne in the buy out were people like Graham Parr, who had worked for Pontins in better days and intimately knew the company, he must have known that it was dying a slow death and would have been well aware of it's property across the country. Parr lead the buy out and is quoted below, obviously stating the property angle of the deal:
Clearly what he is trying to do here is cash in on Pontin's huge stock of property, worth well more than the actual hospitality company itself if the value could be unlocked by refurbishing the properties and selling them off, while probably continuing to run the entertainment side of Pontin's as a 'service' to the property owners. In the long term once the majority of the property was sold, I wouldn't be surprised if they would have split off this 'hospitality/service' company and sold it on, leaving them free to sail off into the sunset with their profits from the initial sale and ongoing fee for renting out the property, while the legacy Pontins is a shell of what it was, providing entertainment for the property investors to attract holidaymakers to their properties."I'm going to change the capital structure of how we sell holidays," he says. "If you take Prestatyn, you've got 800 apartments there. I'm going to offer them for sale to the public just as caravan parks sell caravans. We will let it over the year and the owner will get a return of 8 to 10 per cent."
http://www.telegraph.co.uk/finance/news ... ntins.html
Unfortunately for Parr, Osborne and co this deal went through in March 2008, just weeks after the Northern Rock bank run and about six months later the Credit Crunch hit. In September 2008 Lehman Brothers declared bankruptcy, in early October the British government had to rescue the Royal Bank of Scotland and forced HBOS and Lloyds to merge to rescue HBOS' dire situation. As the economy unravelled suddenly people didn't want to buy holiday resort property as an investment and the logic behind the investment collapsed. Although ironically the tightening of household budgets meant that demand for cheap British holidays - Pontin's actual business -increased.
Within a year Pontins had closed down their Hemsby and Blackpool sites. Hemsby apparently because they only possessed a short term lease (http://www.eadt.co.uk/news/pontins-pull ... y-1-169437) and as such it made their investments uneconomic, aka they couldn't sell off the property on the park given the short lease, even if the economic situation did improve. Furthermore it wasn't attracting enough visitors to pay it's way in the short term, so it got the chop. A few months later the Blackpool site faced the same fate. While I can't find any evidence about Pontin's leases outside of Hemsby and Blackpool, I wouldn't be surprised if they were much longer leases and Ocean Parcs intended on trying to ride out the economic storm with this portfolio - had Blackpool/Hemsby possessed a long term leases or were paying their way I doubt they would have been closed - if there's anything we know about Osborne is that he's prepared to play the long game to get his property (Poole/Swindon). The rest of the sites were retained and were run off minimal investment, based upon the income they were providing, does this sound similar to the last five months at Plainmoor?
By 2010, a promised £50m five year investment across the sites was failing to emerge with bits and bobs done here and there but nothing like what was promoted, plus a £100m promised redevelopment of Southport announced at the time of the buyout had failed to emerge ( http://www.southportvisiter.co.uk/news/ ... nt-6619507) at least judging from this article (http://www.liverpoolecho.co.uk/news/liv ... t-12867248 - it doesn't seem to be a park that had £100m invested only 6 years previous). This sounds eerily similar to GI's failed promises at Swindon et al - come in with a wave of promotion and promising big things and deliver very little.
By the end of 2010 Ocean Parcs had gone into admin. Parr claimed it was because of the recession but 'staycations' at cheap British locations had actually benefited from the recession as previously mentioned. He also claimed it was because of their bank withdrawing financial support but other sources stated very bluntly that it was in fact the management of Ocean Parcs which placed it into administration as a business decision (http://www.bbc.co.uk/news/business-11748317). While I can't comment definitively what the reasons for it were, should we not consider the potential that Parr and Osborne's property gamble had collapsed as a result of the Credit Crunch and they were beating a hasty retreat, putting the company into admin to avoid having to invest any more money (or indeed the promised money)? Pontins nearly died as a result and were saved by another buyout in 2011 but are still largely as crap as ever.
If what I conjecture is true, this is yet another example of Clarke Osborne's modus operandi. Identify a struggling company that possesses land or at minimum a long term lease upon land or assets which represent a viable bit of property speculation. Then promise the world to the public to sell your project. Run the existing company in the interim with minimal investment, promising big things and wait for the opportune moment to exploit the commercial potential of the property. If the local council is dumb enough to let you start a housing development before you deliver on a new stadium then all the better. Once you've made your money on the property, find a way out either through selling off the original company to another mug or through admin blamed upon other factors.
Food for thought. You may think I'm mad. I think this little story, even with my conjecture displays numerous similar elements with Osborne's other business ventures. Of course Osborne might have just gone into Pontins to help a friend but given his total lack of experience in the hospitality industry and his job title as 'Property Director' that does seem a little strange to me :}
