Page last updated at 09:46 GMT, Tuesday, 24 March 2009

Developer collapse hits city plan


The development was the biggest project in Edinburgh since the Scottish Parliament

Edinburgh's biggest development project in a decade has been put on hold after the firm behind it went into administration.

The £300m Caltongate development by Mountgrange Capital has faltered after the developer said the Bank of Scotland had pulled out its financial support.

Mountgrange said the bank had classified its loan as a "toxic asset".

The development in the city's Old Town attracted hundreds of objections from campaigners and heritage groups.

The plans included a luxury hotel, an office complex and 200 homes.

It was the biggest project in Edinburgh since the construction of the £414m Scottish Parliament, and was expected to take up to five years to complete.

Mark Cummings, spokesman for Mountgrange Capital, confirmed that Deloitte had been appointed administrators for the company.

He told BBC Radio Scotland: "For people in Edinburgh, that means that our ability to make good on the Caltongate development will be impaired in the short-term certainly.

"Over the last four years that we've been promoting this project and since the economic difficulty kicked in last summer, nothing has changed from Mountgrange Capital's perspective - we've just published our last annual accounts which made provision for this project.

"But in the last two weeks a change of attitude has been forthcoming from our bankers and that has led to us having to take this action because their support has dropped away."

Mr Cummings said Mountgrange Capital suffered a loss last year after they had to write-down the land value of the Caltongate site.

He said the company had a "strong desire" to take the assets out of administration.

"We have already indicated that we are likely to look at the opportunity of taking the assets that have gone into administration out of administration," he added.

The development attracted the attention of Unesco last year because it would have been part of Edinburgh's World Heritage Site.

Unesco inspectors threatened to launch an inquiry into the city's World Heritage status after campaigners said the development did not fit in with the city's Old Town.

The Bank of Scotland has said it was unable to comment for reasons of confidentiality.

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