Gateway Centre in receivership

Michael Alexander, The Courier, 6 July 2000

The company behind the new £8 million Gateway development in St Andrews has gone into receivership, putting 60 jobs at risk, just weeks after the man at the helm dismissed speculation that there were financial problems with the project.

It was confirmed last night that Matt Henderson and Donald McGruther, of Edinburgh-based accountants Grant Thornton, have been appointed joint receivers at the invitation of St Andrews International Ltd and that efforts will now be made to find a new buyer for the complex.

The leisure company was established to create a luxury members-only bar/restaurant/health club complex in St Andrews on ground leased from the university at North Haugh, on the western edge of town.

However, the company has run out of funds to complete the £9 million project prior to the club’s opening.

Last night Matt Henderson, Grant Thornton’s corporate recovery and re-organisation partner, explained that it was believed the project had failed due to over-optimistic estimates made by St Andrews International as to the number of individuals willing to take out club memberships before the completion of the building.

The company expected £4 million in advance revenues at this stage but, even with the lure of the Millennium Open now just a fortnight away, these have not materialised, resulting in a considerable budgetary shortfall for the company.

Speculation had been growing in St Andrews about the project for some time and last month St Andrews International chief executive Geoff Lang confirmed that the development was running behind schedule. He acknowledged that sales of memberships of the recently formed five star St Andrews Golfing Society (£1500 per person), which would occupy the top part of the building, had fallen behind initial targets. However, he dismissed rumours about the future of the project after concerns about its financial viability were raised by St Andrews Community Council.

The uncertainty arose as builders continued to put finishing touches to the spectacular building at the western entrance to the town, which was originally meant to open on May 15.

Apart from the St Andrews Golfing Society accommodation, it was also to house conference facilities, a museum, information centre and be the "first port of call" for St Andrews University.

It had been hoped that the centre would be running well before the Open Championship, offering local and international members bars, restaurants and a fully equipped health club.

Yesterday Mr Henderson acknowledged that there had, indeed, been funding problems. He said that the company’s principal backers, Lloyds TSB, had worked very hard with the directors in recent weeks to try to find a solution.

The bank offered additional funding, subject to further external investment but regrettably without success.

However, he remained confident that a buyer could be found.

He said, "We are confident that a buyer will be found for St Andrews International Ltd because of its superb location and the quality of the building and its potential uses."

Last night St Andrews West and Strathkinness councillor Frances Melville said she was, "shocked, but not really surprised" when The Courier broke news of the receivership to her.

She said doubts about the viability of the scheme had been expressed when the planning application was granted by Fife Council’s east area development committee last year.

St Andrews Community Council vice-chairman Dr Frank Riddell also expressed dismay at the situation.

He reiterated that rumours had been circulating St Andrews for some time and these had been strengthened when a number of employees, due to start at the Gateway on June 26, had their start-dates put back one or two months.

He said, "This is extremely bad news for St Andrews on the jobs front, and my sympathies go out to those who thought they had found employment here.

"But it should also serve as a warning to other golf-related developments around St Andrews that they must get their sums absolutely right.

"The community council has said from the start that the membership fees were too high."

St Andrews University also expressed disappointment last night.

However, a spokeswoman said the university had always ensured that its long-term position was protected.

She said, "We hope that matters can be resolved as quickly as possible as we attach great importance to the development of the museum and other facilities which we hope to provide to our students, staff and the general public."

Golf club bunkered as the money runs out

St Andrews development goes into liquidation after company fails to get £4m in advance revenues

James Rougvie, The Scotsman, 6 July 2000

A luxury private golf club which had hoped to attract rich US members has gone into liquidation after running out of money.

The £9 million Gateway development at St Andrews was to have opened in May but the launch was postponed until June and again put on hold as its backers searched for the £4 million expected in advance revenues.

But they failed to materialise and liquidators were called in last night. About 60 jobs which were promised to local people are now in jeopardy.

Rumours that the development was in trouble had been circulating for the past month, although backers denied there was a problem.

Only last week, a spokesman for the company said the Gateway, which stands on university-leased ground at the eastern approaches to the town, would definitely be ready in time for the Millennium Open.

The developers, St Andrews International, had hoped to provide a prestigious private luxury international members' golf club at £2000 a year, business and conference facilities for 300 delegates, a gym, bars and restaurants, golf clinic and access to some of Scotland's top courses.

It was also to house a museum for St Andrews University's priceless collection of silver maces dating back to the 15th century.

The liquidators said last night that the project had failed because it had been too ambitious - a forecast made by local critics who doubted whether a golf club without a golf course would ever succeed.

Matt Henderson, of liquidators Grant Thornton, said last night: "We believe that this project has not succeeded because of optimistic estimates made by the company of the numbers of individuals willing to take out membership prior to the completion of the building.

"At this stage £4 million was expected in revenues from advance memberships for the facility but these have not materialised, resulting in a considerable shortfall."

But Mr Henderson said that Lloyd's TSB offered additional funding subject to further external investment but regrettably without success. We are confident that a buyer will be found for St Andrews International because of its superb location and the quality of the building and its potential uses."

It is believed that university bosses are angry and embarrassed over the delays in completion of the building - although it is substantially finished - and the subsequent failure of the company. Their involvement was one of the persuasive arguments in favour of the development going ahead despite a number of protests from the St Andrews community.

Last month the cream of Scotland's academia were forced to hold a millennium ball in nearby halls of residence after having been promised the party would be held at the Gateway.

The high-profile reunion of former St Andrews students was switched at the last minute, apparently because of unforeseen delays with building work.

That was only a week after a reception for 257 members of the Association of Golf Club Secretaries from all over the world was also switched to the nearby university physics building due to snags over a fire safety certificate.

It is understood a number of prospective employees at the development have taken legal advice.