Ocean Kinetics - The Engineering Experts

Letters / Disappointed and concerned

HNP Engineers (Lerwick) Ltd are disappointed and very concerned with recent statements issued by SCT and SLAP (Concerned by HNP criticism; SN, 04/02/16 and Trust backs SLAP over HNP row; SN, 04/02/16).


Before HNP issued a public statement on the issue concerning the sale of the site at Commercial Road on the 16 December 2015, it seems from what HNP have learned that many of the trustees of SCT were not aware of the full situation.

As far as we know, they had not been given any regular reports or information regarding the sale of the land.

We understand that it was only after Trustees requested a special meeting of the Trust to discuss this matter that a report was drawn up by SLAP.
Our understanding is that the request for this meeting was initially refused.

HNP have serious concerns regarding the SLAP position, which appears to have been presented to Trustees at that meeting, and relayed to the press thereafter.

In particular we are astonished that SLAP state that in 2014 their property agent discussed with the Director of HNP the possibility of the company purchasing the land from SLAP.

This is categorically untrue if it tends to suggest that HNP were offered the site at market value. No such discussion took place. If it had, HNP would have sought to negotiate a value for the site and purchased it at that time, ensuring the future of the company and avoiding the current situation.

If Trustees have been told that an option to purchase the site was on the table for discussion during 2014 and HNP chose not to pursue it, this may well have had an influence on their overall view of the situation.

HNP did have discussions with SLAP’s property agent during 2014 about the possibility of replacing the exterior cladding of the building with a view to then obtaining a long term lease of the site from SLAP.

HNP subsequently met with an architect from another company and talked about the possibility of how this work could progress.
The possibility of a longer term lease was the only time SLAP, via their property agent, made any indication of perhaps finding a solution which would allow HNP to remain at Commercial Road.

Before the length of lease or any other detail was ever discussed, the adjacent company LESS found alternative accommodation and SLAP very promptly wrote to HNP and withdrew any possibility of a new lease agreement.

It was not the case that HNP chose not to investigate and consider this option.

SCT states that under company law, it would be an offence for the Trust to interfere in the running of SLAP.

No one is expecting Trustees to interfere with the running of SLAP, but they surely must have the opportunity to ask questions of the Directors whom they appoint if there is an issue which is causing concern. This is particularly the case where SCT is a charity and presumably seeks to ensure oversight of the activities of its subsidiary.

Our lawyers tell us that under company law, shareholders have the power to remove directors in certain circumstances. For example, if they consider the overall best interests of the company are not being protected.

Our lawyers also tell us that in the case of a charity, what is in the best interests of the charity may not always be what will yield the highest possible return. In fact, given the purposes of SCT, we say acting in the best interests of the charity will likely require the charity Trustees to look at the wider commercial impact on Shetland industry when it comes to this decision.

When SLAP eventually decided to sell the site and advertised it on the open market in August 2015, HNP subsequently made a very good and substantial offer for the whole site, which was twice as much as the professional valuation that the Bank of Scotland had commissioned with a view to providing finance.

This would have been of significant benefit to the charity and in turn to the people of Shetland.

Apart from the monetary value of HNP’s offer, absolutely no consideration appears to have been given to the value which a company like HNP provides to the community of Shetland as an employer, important service provider and as a provider of training to enable young people to gain a qualification in a skilled profession.

In the circumstances we have instructed our solicitors to make a formal complaint to the Office of the Scottish Charity Regulator (OSCR) about the conduct of SCT/SLAP in this matter. The complaint has been submitted and our lawyers await an acknowledgement from OSCR.

SLAP have insisted that it has given HNP every chance to purchase the site.
HNP submitted a very competitive offer for the whole site before the closing date deadline set by SLAP.

Four days later SLAP’s property agent contacted HNP by email and asked if they would consider raising their offer as ”when all things are considered there is not a great deal separating the value of the offers to my client”.
After consideration, HNP increased their offer to more than twice the commercial value.

We understand that the Chairwoman of SLAP then met with another interested party, perhaps six weeks after the deadline, in the full knowledge of the value of HNP’s offer and presumably negotiated a higher price with the third party.

SLAP now publicly state that the UHI/Cityheart Limited bid is higher, but at the moment there is no clear and transparent evidence to back this up.
It is unclear if this offer is conditional on planning permission being granted and it is also unclear whether any assurances have been given regarding the granting of planning consent.

HNP do not feel that they have been given a fair opportunity to purchase the site as long-term tenant.

SLAP states that various alternative sites are or have been available to HNP in the Lerwick area. However none of these sites are owned by SLAP and it is not for them to say they are available. Several are in close proximity to Shetland College UHI at Gremista and would be in an ideal location for student accommodation.

SLAP also states that two local businesses have offered sites on which to build bespoke premises for HNP.
HNP have never been contacted by any local businesses with regard to this.

None of the sites suggested by SLAP are suitable for HNP to relocate to, and this view has been expressed to their property agent on several occasions.

SLAP say they continue to offer a fair sum for the premises currently occupied by HNP. They are obliged to compensate HNP for the building we have erected on site. The sum offered so far is £27,000.

However this figure would come nowhere near the costs HNP would incur if they were to relocate as these costs would include site preparation, construction of an appropriate building, removal cost for all equipment including precision machinery, utility connection charges, new lease agreement, rent and other charges plus all SIC planning and building regulation fees.

It is obviously a good thing for the inhabitants of Shetland if SCT’s property company can generate income, which helps to support the various trusts and other organisations in the islands but this should not be at the expense of a local business. Does money matter more now than 16 highly skilled engineering jobs and apprenticeships?

What is the point in the continued funding of the arts, heritage, leisure and many other life enhancing activities in the Islands if there is a lack of employment for the people who live here?

HNP have always wanted to remain where they have been situated since they were founded and we don’t see that it is wrong to do so. We have been unable to find suitable premises to relocate to.

All we want to do is to continue to run a successful business, employ people, pass on skills to the next generation and provide an important service to people and other businesses as this company has done for almost half a century.

We really appreciate the tremendous support of the local population and also from people in many other locations around the world. We are not in this for money or to be difficult. We just want to be left alone to do what we do best.

Ian Walterson
HNP Engineers