RiverOak addresses key questions about Manston CPO


Dec 17, 2014 | Media statement

Below we have answered some of the questions that have been most frequently asked of us, both to explain the process and to reassure the Thanet community of RiverOak Investment Corp’s suitability as an indemnity partner to Thanet District Council.

  1. Who has the power to acquire Manston Airport by Compulsory Purchase for planning purposes?

Only Thanet District Council. Not the Government and not Kent County Council

  1. What are the grounds for a Compulsory Purchase Order (CPO)?

A CPO can only be made where there is a compelling case in the public interest. The Council is of the view that that it is in the public interest that Manston should be an airport, but the present owner wants to use the site for something else.

  1. Who will make the final decision?

Once the Council decides to proceed it serves notice on the owner. If the owner objects, a Government Inspector will be appointed to hold a public inquiry at which both sides will make their case. The inspector then writes a report which goes to the Secretary of State for Communities and Local Government, who makes the final decision.

  1. RiverOak has offered to indemnify the Council. What does this mean?

RiverOak will cover ALL the costs of the CPO process, the costs of acquiring Manston and all related costs. These include legal fees, valuation fees, inquiry costs and any other expenditure incurred in acquiring Manston under CPO. The Council will not have to pay for anything.

  1. What happens if RiverOak won’t or can’t pay?

Under the terms of the indemnity, the Council will not be required to take any particular step until it has first received sufficient funds from RiverOak. The indemnity therefore prevents situations where the Council has incurred a liability which it needs to try and sue RiverOak to recover.

  1. How will these payments be managed in practice?

RiverOak will open an escrow bank account which will always hold sufficient funds to meet any pending bills and which can be monitored by the Council.

  1. What happens if the Secretary of State decides against a CPO?

Unless there are grounds for appeal, that will be an end to the matter. RiverOak will have paid for everything and the Council will not be out of pocket.

  1. What happens if the Secretary of State confirms the CPO and the owner decides to appeal?

Appeals against CPOs are rare, but if there is an appeal RiverOak will cover all the costs in the same way as in the original CPO process.

  1. What happens after the CPO is confirmed by the Secretary of State and when does the question of “Compensation” arise?

Nothing happens until the Council serves notice on the owner that it wants to transfer ownership and take possession of the site. There is no liability to pay the owner anything until this step is taken.

  1. Will the Council actually take possession?

No. Under the terms of the Indemnity Agreement with RiverOak the Council will immediately transfer ownership and possession to RiverOak.

  1. What is the Compensation that has to be paid to the owner?

This is intended to compensate the owner for the value of the land which is being taken. Normally the value would be based on existing planning use and on the price paid for the land in any recent open market disposal.

  1. Who fixes the amount of compensation?

If the parties are unable to agree a value this is done by a government body known as the Upper Chamber (formerly the Lands Tribunal).

  1. Is it possible to get an idea of the value before compensation is awarded?

Yes. During the Inquiry, both sides will be advised by professional valuers, who will base their valuations on a recognised set of criteria.

  1. Will the Council be at risk when it comes to the question of compensation?

No. RiverOak have proposed using a process where they will deposit an agreed amount of funds in an escrow account BEFORE possession is taken and the Council will not elect to take possession or ownership transfer until this has taken place.

  1. What happens if the amount of compensation awarded by the Upper Chamber is more than expected?

In order to provide the Council with full protection against this outside risk, RiverOak will take out insurance to cover any additional amount of compensation over that estimated in the unlikely event that the compensation exceeds the funds already deposited in the escrow account.

  1. Are there any foreseeable circumstances in which the Council might be saddled with a financial liability arising out of the CPO?


  1. Is RiverOak willing to negotiate with the owners to avoid the need for CPO?

Yes. CPO procedures require that every attempt should be made to agree things up to the day of the public inquiry. However it seems clear that the owners will not negotiate until the Council passes a CPO resolution.

  1. Does RiverOak need any public funding for this project?

No. We need nothing from the Government, from Kent County Council or from Thanet District Council.

  1. RiverOak has formed a new company for the airport project. Why?

This is normal procedure for a private equity group like us, or indeed for virtually any commercial party. We create a new company for every project and channel our investment funding into it, much the same as the Disney Corporation forms a new company for every new film it makes.

  1. Why did RiverOak refuse to produce a 20 year business plan?

This is not strictly correct. We refused to produce numbers for 20 years because we felt it involved an unacceptable amount of guesswork/predictions about future economic conditions.

  1. So what did you produce?

We produced numbers which demonstrate to our satisfaction and that of our investors that this airport can break even within 18 months of re-opening.

We then extrapolated those numbers to show a healthy profit at the end of five years based conservatively on cargo and engineering operations (which is only one part of our longer term vision).

We also produced a lengthy narrative document which describes our plans and vision for Manston over 20 years. Those plans are also set out in a submission that we made to the London Airports Commission at the end of July.

Q: If a CPO is successful, where do you see Manston Airport in 10 years’ time?

  • 1,300 direct jobs plus at least 1,000 indirect jobs
  • 120,000 tonnes of cargo a year with an emphasis on perishables
  • Packing, storage and distribution of perishables
  • 100 aircraft a year recycled in facilities developed jointly with a major aircraft manufacturer
  • 50 aircraft a year repaired/maintained
  • Growing business jet traffic
  • Light aircraft training
  • A resident airline carrying 1.5 million passengers a year to leisure destinations
  1. Why does passenger traffic feature so low down?

We are keen on passenger traffic but all our work shows that the airport will be more soundly based financially if the early focus is on cargo and engineering.

  1. How many jobs would there be in 10 years’ time?

We expect to have created about 1,300 direct jobs plus at least another 1,000 indirect jobs. A significant number of these jobs would be for trained personnel such as engineers, air traffic controllers and fire fighters.

  1. With this Manston CPO are you asking the Council to do something which has never been done before?

No, the general principle that a council should find a private sector indemnity partner to cover all its risk is a tried and tested one and has been used in the UK for at least 15 years.