City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Controversial Old Town Development Put On Hold

By edg - Posted on 24 March 2009

Mountgrange Capital, the organisation behind the controversial £300 million Caltongate luxury hotel, retail, and residential development in Edinburgh Old Town have announced that they have gone into administration.

In a message on the company's home page today, London based directors Martin Myers and Manish Chande confirmed rumours that the company's financial difficulties have come to a head.

"The problems surrounding the UK property industry in the current financial environment have been well-documented. Mountgrange Capital has not been exempt from these pressures. The industry's current problems have been further exacerbrated by the scale of banks' exposure to commercial property lending. And UK banks now seem to be significantly scaling back their involvement in the sector."

However, while the directors of Mountgrange Capital have appointed Deloitte to act as administrators for the company, including the subsidiary behind the Caltongate project, they say it is "to allow them sufficient time to explore alternative funding options."

The directors lost the backing of Edinburgh-based HBOS, shortly after gaining planning approval from Edinburgh City Council for the project, but hope to return under a different guise.

In their statement, they said: "We believe that these schemes continue to have commercial merit. Despite our best efforts, continued funding from existing banking channels is no longer a feasible option. We are, therefore, examining other alternatives including making an offer to buy the assets out of administration and are uniquely placed to do so."