Elaborate design of The Cube saw costs mount up

Apr 6 2010 By Alun Thorne

The administrators of the iconic Cube development in Birmingham city centre have praised those behind the scheme for their “co-operation and support” under the most trying of circumstances.

PricewaterhouseCoopers was called in at the request of Lloyds Banking Group after Cube developer Birmingham Development Company was unable to reach a funding agreement to complete the project.

PwC’s Mark Batten, Matthew Hammond and Peter Spratt were appointed joint administrators of BDC and its main contractor arm Build Ability – which was launched specifically to build out the Ken Shuttleworth-designed mixed use project – and they have since announced that Lloyds will continue to fund the project to completion.

Mr Hammond said one of the first tasks of the administration was to ensure all the sub-contractors on the project agreed to continue working until the building was complete – a task made easier by the help of senior staff members from the companies that had just been placed into administration.

“Since our appointment as administrators, we have been working to keep The Cube project on track and to preserve the project for all involved,” said Mr Hammond, who is a partner at PwC in Birmingham.

“We have been in close contact with all 39 of the main sub-contractors, which have some 500 workers on site each day, to seek their agreement to continue working.

‘‘In return, they have been given assurances that they will be paid for work carried out in February and March as well as for any further work they do during the course of the administration.

“We are pleased to confirm that we have now secured the support of most of the critical contractors, although there are still a small number of contractors with ongoing queries and concerns. We are continuing to discuss these with them individually and are hopeful that we will secure their support.

“I would like to thank the staff of BAL for their understanding, co-operation and support in the immediate aftermath of the administration. They have certainly helped us to keep The Cube project going.”

The administration of BDC – which is headed up by respected property entrepreneur Alan Chatham – came as a huge shock to the property community as the building has already been partially let to the Highways Agency and a significant number of the apartments in the building have already been sold.

However, it is believed that the intricate design caused costs to mount up leading to the bank’s decision to call in the administrators.

Despite the personal blow for Mr Chatham and his team – who were also behind the Mailbox, although this is held in a separate company – Waheed Nazir, director of regeneration at Birmingham City Council, said the fact that the project would be completed was crucial for the city.

He said: “We are pleased to here that Price WaterhouseCoopers have committed to completing the Cube development and the associated public realm works required as part of the buildings planning obligations.

“The Cube occupies a prime location within one of the most vibrant areas of the city, which will only become even more attractive to investors in the future as neighbouring projects, such as the Library of Birmingham, Paradise Circus and Arena Central, come on line.

“Once the project is complete the administrator should have little trouble finding interested buyers for this landmark development, and we have pledged to do all we can to work with interested parties to secure their long term investment.

“We are also pleased to have been reassured that this news in no way affects plans for either the Mailbox or former Post and Mail buildings, both of which are owned by different companies to the Cube.”

Neil Rami, chief executive of Marketing Birmingham, said the administration would be a huge blow to one of the city’s most respected figures but was confident he would bounce back.

He said: “Alan Chatham and Birmingham Development Company have been a huge force for good in this city.

‘‘The Mailbox helped redefine what was possible here in terms of retail and mixed use developments. 

“Naturally the difficulties encountered by The Cube, as a result of the economic downturn, are a real disappointment and like everyone we are keen to see the building completed on time.

‘‘Whilst a significant setback I’m sure this is not the last we will hear of BDC’s ambitious founders.’’