By Paul Homewood
Don’t Cry For Me Argentina Swansea Bay
Mark Shorrock
Anybody who might be tempted to feel sorry for Mark Shorrock for losing pots of money now that the government has rejected his lagoon project might like to think again.
The Annual Accounts for Tidal Lagoon (Swansea Bay) plc have just been published.
https://beta.companieshouse.gov.uk/company/08141301/filing-history
But first, to backtrack. As the Accounts state, TLSB is a special purpose vehicle, set up to develop, finance, build and operate the lagoon at Swansea Bay, and nothing else:
Nearly all of the equity provided so far has come from Prudential and InfraRed Capital, who in return have the right to provide all of the construction equity:
So far, £16m has been raised in equity, which has already been wiped out by losses since the company was set up in 2012:
In other words, it is Prudential and InfraRed who have lost their shirts.
Shorrock’s lagoon business is run via a complex network of companies:
Shorrock has ultimate control of all three companies, with SOE listed as the TLPLC’s “Controlling Party”
TLSB’s accounts state that TLP supplies it with development resource and management services, for which it paid £2.4m last year.
Between 2012 and 2017, the Annual Accounts confirm that TLSB paid £13.3m to Shorrock’s company, TLP, for these services.
In addition, TLPLC has lent money to TLSB at 20% interest, earning £1.2m in interest in the last two years alone.
The loans are secured against a floating charge against TLSB’s assets, although these don’t appear to be worth much at the moment.
However, even if the loan goes bad, it seems that Shorrock will barely lose out. Although he has a controlling interest in TLPLC, it would appear that nearly all of the equity has been provided by outside investors, with InfraRed and SIMEC mentioned.
This is the trick, as explained in the 2015 Accounts:
https://beta.companieshouse.gov.uk/company/09359280/filing-history
The original 50,000 shares were purchased at £1 each. The owner of them appears to be Shire Oak Energy (SOE), who are of course listed as TLPLC’s ultimate parent company. SOE of course is controlled by Shorrock. SOE’s Accounts tally with this valuation:
Subsequently, those 50,000 shares were subdivided into 5,000,000 at 1p each. When outside investors came along, they paid £5,219,000 for 1,056,656 shares at £4.94 each.
During 2016, a further 893,735 shares were issued for £5,934,000, ie £6.64 each.
https://beta.companieshouse.gov.uk/company/09359280/filing-history
As at Dec 2016, (the most recently filed Accounts), SOE appear to own 5,000,000 shares, 77% of the total, but have only paid £50,000, 0.44% of the total equity.
Shorrock receives most or all of his remuneration from SOE, who recharge some to TLPLC and TLP (who you may recall also recharge to TLSB:
As a small private company, SOE is allowed to file abbreviated accounts, in particular not having to declare directors emoluments.
But it is clear that SOE and Shorrock have done very nicely out of the tidal lagoon businesses, despite the huge losses racked up so far.
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July 9, 2018 at 12:52PM
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