Historic Royal Palaces sets up £26m borrowing facility
Historic Royal Palaces (HRP) has set up a £26m borrowing facility to help it get through the Covid-19 crisis following a dramatic fall in income.
The charity operates five properties in England (Tower of London; Hampton Court Palace; Banqueting House; Kensington Palace; and Kew Palace) and one in Northern Ireland (Hillsborough Castle).
“In common with all museums and heritage sites, we have lost nearly all of our income for the past three months,” a HRP spokeswoman said. “Since we’re dependent on international tourism – two thirds of our annual visitors are international – we expect our recovery to be slow.”
HRP receives no funding from the government but as the organisation
is contracted to the Department for Digital, Culture, Media and Sport, it needs
its permission to borrow commercially.
This is now going through the parliamentary approvals process following a written statement by Nigel Huddleston, the Secretary of State for Sport, Tourism and Heritage, earlier this month.
Of the £26m, the government will provide the lender with a guarantee of 80% against the outstanding balance of the finance. Huddleston said that a previously approved £4m overdraft facility for HRP, which the government also acts as a guarantor for, has now been called on.
“While HRP currently have
reserves of about £33m, the use of these reserves before they mature would not be
cost effective and lead to financial penalties being incurred,” said the
“The £4m overdraft facility with Barclays Bank has therefore been put in place to meet their immediate cashflow requirements in April and thus the £4m guarantee has been activated.
“HRP expects that the current crisis will exhaust all of their reserves within the current financial year,” the statement continued. “The new guaranteed borrowing facility of up to an additional £26m will enable HRP to allow their reserves to mature and invest in the business.”
HRP is currently preparing a plan to reopen its properties. The outdoor spaces at Hampton Court Palace and Hillsborough Castle will reopen this month and exact dates for these are expected soon.
The HRP spokeswoman said: “The other sites are a bit less certain in terms of timings. Like everyone, we’re having to think through the practicalities. Our model is going to be very similar to the ones up and running already – limit capacity by asking people to book online, introducing lots of new signage and safety guidance and, of course, all the necessary hygiene measures.”