Purpose

Aequus has faced delivery and financial pressures due to adverse market conditions, delayed sales and reduced reserves. The Council, as Shareholder, has supported a Sustain Plan focused on a smaller number of more deliverable sites, with the aim of returning the business to profit between 2026 and 2029.

The decision is required to provide assurance to the Aequus Board on continued use of the Working Capital Loan Facility and associated shareholder liability, recognising the Council’s control over land release and delivery pace.

To support the decision, the Council appointed EY to review Aequus’ financial position, the robustness of the Sustain Plan and the mitigations supporting solvency through the existing Working Capital Loan Facility.

EY’s due diligence provides assurance that Aequus is not expected to run out of cash in the relevant period and that the proposed indemnity is not expected to crystallise. The report therefore seeks approval for the proposed decision, recognising the limited risk identified.

Decision

To confirm that the provision of a time limited Indemnity to the Directors of Aequus does not constitute a Subsidy and approve the entry into the Deed of Indemnity to the Directors of Aequus Construction Ltd on a time limited basis in a form agreed by the Monitoring Officer.

Alternative options considered

Option 1 - Changes to the Working Capital Loan Facility and equity investment, were considered but discounted due to potential subsidy and compliance implications.

Option 2 - Weakening repayment enforcement was also discounted, as it offered limited viability benefit and would require further assessment against CMO principles.

A time-limited indemnity is therefore the preferred option, providing targeted assurance to the Aequus Board without wider changes to the loan arrangements.