The Walmart-owned supermarket chain that promises ‘big savings’ and ‘price locks’ for its customers is seeking the same for itself in a land deal with the Isle of Wight council.
The promise of approximately £20m from ASDA in return for land just outside Newport has been seen as good news for the cash-strapped council.
However, following planning permission being granted for the new supermarket and petrol station, ASDA are now arguing that, “it does not have the ‘satisfactory planning permission’ required for it to complete the lease for the site” and are seeking to reduce the purchase price by 12%.
Terms of the Lease could be varied
The Isle of Wight council does not share this view.
Rather than pursuing legal action against ASDA for a breach of contractual obligations, a paper being presented to the Isle of Wight Executive next week, seeks approval of a variation to the terms of the Agreement for Lease.
In February, the council received a letter from ASDA’s lawyers unhappy with two of the planning conditions.
One prohibiting deliveries between midnight and 5am, the other allowing up to four hours of free parking, which the supermarket chain believes would place an unreasonable burden on the use and occupation of its foodstore.
Agreement of the Lease needs to be completed by 15th May – just one day after the Executive meet to consider the recommendations or the council could be facing a protracted legal battle with the supermarket giant, which the paper states could run to over £1m.
Money off please
But the problems don’t stop there.
ASDA’s ‘aspirations’ as far as the Lease is concerned extend further to include:
- A reduction of 12 per cent on the gross purchase price (around £2.4m).
- Immediate transfer of the freehold to ASDA on completion.
- Council to make a section 73 application to amend conditions 25 and 27 of the planning permission (those mentioned above).
- Completion of the Agreement with Asda to take place on 1 September 2015 irrespective of the outcome of the section 73 application.
The recommendations
The following recommendation is being made to members of the Isle of Wight Executive.
That options (1) and (4) be adopted:-
(1) Agree to vary the terms of the Agreement for Lease with Asda as set out in confidential appendix 1 and enter into a deed of variation on 15 May 2015 and complete the transaction on the 1 September 2015.
(4) Agree to issue legal proceedings against Asda for breach of contract should it not complete the revised agreement with the Council on 1 September 2015
The press and public are unable to see the contents of the confidential appendix, so aren’t able to understand exactly what is being agreed.
Promise of jobs
450 jobs have been promised once the supermarket opens its doors – originally planned for late 2016, early 2017.
Full details are set out in the paper below. Click on the full screen icon to see larger version.
Image: didbygraham under CC BY 2.0
