Fresh doubt over the Circuit of Wales project in Ebbw Vale will not affect TVR’s decision to locate its production facility in south Wales, according to a spokesman for the reborn sports car company.
The plan to build an international-standard race track and automotive business park in the Welsh valleys has today been hit by the news that the Welsh Government will not underwrite private investment in the venture.
The Welsh Government had been asked to financially guarantee the whole of the project, which has attracted £357 million of private funding, with insurance firm Aviva one of the major backers.
The Heads of The Valleys Development Company claimed that the Circuit of Wales and associated businesses would create as many as 6000 new jobs in the area, which is one of the most deprived in Wales. It is now hard at work on a revised financial deal.
A TVR spokesman told Autocar: “Even if the Circuit of Wales is 100% off the table then it changes nothing. TVR will still locate in south Wales, albeit at a different site.”
Welsh economy minister Edwina Hart said the Welsh government’s decision not to back the circuit had been made after legal consultation: “The final official advice recommends that I should not agree to underwriting the Aviva investment in the scheme for two reasons.
“Firstly, the significant question around the viability of the project and second, the unacceptable risk to the Welsh Government of in effect underwriting the entire project.
“These two factors mean that there is both a significant value for money gap and a real legal challenge around issuing such a guarantee.
“It is important to remember that this project started as being one that would be fully funded by private sector risk capital without the need for a government guarantee.
The government had been asked to consider a guarantee of 80% of the project’s value, which Hart said “may have reduced our risk to an acceptable level”, but circuit chiefs had not been able to secure any private risk capital to make up the shortfall.
The Welsh Government has already supported the project to the tune of £9m and has pledged a further £16m if the 830-acre facility is built.
Circuit of Wales chiefs from the Heads of the Valleys Development Company are remaining upbeat that they can put together a revised financial deal to continue with their plans.
In a statement issued today (Thursday), chief executive Michael Carrick said: “The Circuit of Wales is committed to the regeneration of Blaenau Gwent through the building of a leading automotive and leisure destination in South Wales. We are developing financing arrangements with Aviva Investors and Public Sector Wales and have put forward two alternative options with revised commercial terms.
“These alternative arrangements will reflect a more balanced financial support package for both the public and private investment parties. We are working closely with all parties involved, including the local community and councils to conclude the deal over the next 6-8 weeks.”