WSP concludes first environmental liability transfer outside of the US | 19th Apr 2011
Our groundbreaking work on the brownfield liability transfer at a former Kodak chemical site in the UK has unlocked regeneration, created new jobs in an industrial area, cut costs by 45% and removed risk from the land transaction...
We have completed the remediation of a former Kodak imaging chemicals production facility in Liverpool, concluding the first ever environmental liability transfer undertaken outside of the USA.
The liability transfer programme, known as 'Active Transfer', allows owners of brownfield land to transfer responsibility for managing their associated environmental obligations, known and unknown, to a third party.
The groundbreaking process reduced remediation costs and unlocked a regeneration scheme that currently hosts six businesses, employing around 140 staff. Other hard-hit industrial areas across the UK could benefit from the process, which ensures that brownfield land transactions are not prevented by the requirement to responsibly transfer environmental liability.
The agreement saw WSP take on Kodak's environmental obligations, paving the way for the sale of the 500,000 sq ft site to Acorn Developments Ltd, a subsidiary of International Process Plants and Equipment (IPPE), a company headquartered in New Jersey, US, specialising in the purchase of industrial plant, facilities and processes across the world.
WSP's pioneering Active Transfer allows buyers and sellers to negotiate the transfer of assets free from the cost uncertainty of historical environmental liabilities. Sellers are able to obtain the full value of the asset knowing they have responsibly managed the liabilities and buyers do not have to be as concerned about the environmental conditions or the associated liability. Both the buyer and seller can concentrate on their primary business knowing
WSP will address the environmental conditions at the site.
Under the agreement, provisions for the remediation are placed into a ring-fenced fund to be drawn on by WSP during the remediation process. Not only did Kodak benefit from the removal of the provisions from its balance sheet at a substantially reduced cost (55% of the original provision), but WSP was able to return 25% of the ring-fenced funds to the project stakeholders
on completion.
WSP contractually assumed the obligation for cleaning up the Kodak site, including any cost overruns and third party claims. The programme was underpinned by a leading US insurer.
The transfer of environmental liability is now even riskier with financial security at a premium and poor covenant strength of potential purchasers commonly standing in the way of brownfield land transactions. Active Transfer provides a solution; allowing assets to change hands safely and ethically, with remediation provisions held securely in a ring-fenced fund.
Tony Field, Site Manager and Managing Director of IPP Europe and formerly of Kodak, comments: "The Active Transfer model enabled both seller and purchaser to achieve their stated objectives; Kodak to fully transfer their environmental liabilities and responsibly exit the site and IPPE to secure a site where we could optimise the existing process plant and equipment and secure regeneration and job creation. We valued the fact that WSP could draw on its experience in the US, where the scheme is a well recognised vehicle for unlocking the value of contaminated land."
Stuart McLachlan, MD of WSP Environment & Energy, says, "We are delighted to have concluded the remediation following Europe's first Active Transfer, connecting the experience and track record of our US colleagues in liability transfer with the strong market demand in Europe. We expect Active Transfer to become increasingly accepted outside the US as a robust solution for companies looking to be released from the historical legacy of contaminated land liabilities in a responsible manner."
Download the full press release here.
You can read more about this into today's FT or on FT.com here.