Populo Adds to Newham’s Problems

It appears that Populo is struggling to meet its debts to Newham. It seems to have run out of cash. (Reported in Room 151)

Newham have loaned Populo £40m. Nothing wrong with that. The mayor has committed to build more homes and Populo is the vehicle she has chosen to do the delivery. However, it appears that Populo is unable to meet its repayment obligations. 

Newham and Populo therefore have entered negotiations in order to convert the loan into equity. Again, in principle, there is nothing wrong with this. Except that Newham needs cash. It has effectively lost, or rather tied up £30m for 50 years.

The assets will still sit on the balance sheet, but £30m (or the repayments thereon) will  not be available to offset the looming cash crisis that Newham faces.

Perhaps Cllr Ali and the mayor might have a conversation about prudential lending…