Architects raise fears investors may cut corners in Caltongate scheme

Published on Tuesday 7 April 2009 09:39

ARCHITECTS behind the Capital's stalled Caltongate scheme have raised fears that new investors could seek to cut corners to save money.

It is understood there are currently around half a dozen potential developers interested in filling the hole left by Mountgrange Capital after the company went into administration last month.

Last week, the Evening News reported sources close to the talks now believe development on the site may have to involve several firms.

It is understood that former Mountgrange Capital directors Martin Myers and Manish Chande are among those keen to work with others to get the scheme moving.

They have potential funding available to them through a cash-rich fund run by Mountgrange Investment Management, a separate and independent company from Mountgrange Capital.

The pair are reported to have raised 200 million and have the support of the scheme's designers, including Page & Park Architects' partner David Page and Malcolm Fraser. But Mr Fraser, who has designed offices, shops, a nightclub and a restaurant on the site, said he was worried that the recession would lead developers to cut corners to protect their investment on the Allan Murray Architects-led scheme.

He said: "When things get sticky, that's what may happen. I would certainly encourage the city council to make it clear to any new investors that there should not be a coarsening of the scheme.

"I'm worried that in the current economic climate, there are elements which potential investors may look to skimp on. I have been around long enough to know that's what may happen."

Mountgrange Capital went bust last month, saying it spent 5m over the past four years trying to get the 300m project through the planning process. It said that if the process had taken the two years scheduled the project would have gone ahead as planned.

The news of Mountgrange Capital's slide into administration came just over a month after the Evening News revealed that the company was battling for survival after recording a 24.3m loss.

John Reid, joint administrator at Deloitte, said: "To date there has been significant interest in the assets of Mountgrange.

"As yet, no formal offers have been received from any party in respect of Mountgrange's assets. The joint administrators are currently in the process of assessing the best strategy for the realisation of the assets and will employ the relevant marketing process in due course.

"We do not anticipate a sale in the short term as it would be unlikely to realise best value for the asset, however, they will consider all offers received on their merits."