The boss of controversial development company High Street Group has said a plan to go into administration is the “only way forward” for the company.
The Newcastle company, which is responsible for building Hadrian’s Tower, the city’s tallest building, is applying this week to go into administration after a turbulent period which has seen it face heavey criticism from investors, customers and contractors.
In a video sent to investors, chairman Gary Forrest admitted that “mistakes have been made”, particularly in the way the company communicated as it hit a serious of issues.
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But he is hoping a plan to go into administration will allow it to work with other development groups on realising cash to pay back its investors in five or six years.
In the video, he said: “The only way forward that makes any sense is the recovery plan.”
Mr Forrest said the group had £1.3bn worth of projects under development before the pandemic, but had been hit by the loss of funding from investment groups after Covid hit.
He said the group last year suffered from a rush of investors wanting early redemptions which was “burning cash” within the company. He also blamed “noise on social media” for some of the problems surrounding the company.
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He said property developments either taken on by Hadrian Real Estate - a company that was originally part of High Street Group but is now owned by a former senior executive - or joint ventures with third parties should create cash to pay loan note holders within the next five or six years.
He added: “I’m not going to sit here and say we haven’t made mistakes on this journey. I’ve openly admitted that mistakes have been made, as in any business. We grew too big, too fast. We went, in a three or four-year window, to becoming the largest PRS developer in the 海角视频, with £1.3bn worth of projects under development. We had a valuation of the business at one point of £930m, pre-Covid.
“There is an argument of: did we have enough cash reserves to manage an instance like Covid hitting? Obviously we didn’t. We didn’t expect all the early redemptions we had. Did we have enough cash reserves? Possibly not.
“There’s an abundance of mistakes being made but one of our biggest mistakes was communication. Communication is easy when things are going well. People communicate badly when things aren’t going too well, whether it’s business, sport, relationships, whatever it is. When something’s not good, people don’t know how to communicate bad news. And we were bad at it, we didn’t know how to do it.”
As well as Hadrian’s Tower, High Street Group had been planning significant developments close to St James’ Park in Newcastle and at the former Brett Oils site on the riverside in Gateshead. Both schemes have now been taken on by other developers, as have schemes in the North West and in Birmingham.
Over the last two years, the company has twice seen its auditors resign while its accounts are significantly overdue and a number of its subsidiaries are facing being struck off.
High Street Group has been contacted for comment.