Investec Bank (Channel Islands) Ltd. v The Retail Group Plc

Charles Hollander QC (instructed by Eversheds) for the Claimant Neil Mendoza (instructed by Altermans) for the Defendant Hearing dates: 17/02/09 � 24/02/09 ____________________

The cash flows included an exit return analysis which showed a projected property valuation for the portfolio as at December 2007 of about �20.2m. The cash flows showed senior debt of �12.25m, mezzanine debt from Investec of �2.5m and further subordinated lending (including what was described as "equity" from Mr Murphy) of about �1.2m. In addition, an investment return was expected on the residential element within the development. This was projected to be in the order of about �3.75m.

Although reference was made there to Investec's Exit Fee Agreement, no such document was provided at this stage. It was negotiated subsequently. The Facility Letter provided for TRG to give Investec a first legal mortgage over all the properties in the portfolio as security for the loans.

It appears from that letter that the discussion at this stage contemplated that there might be sale of individual units within the portfolio rather than a sale of the whole, and that part of the overall exit fee would become payable on such part sales.

This was the relevant definition of the profit which was to be shared between Investec and TRG under the terms of the proposed EFA. Clause 8 of the draft (which provided for distribution of net sale proceeds upon a sale) stipulated that the net sale proceeds or estimated net sale proceeds should be distributed, first, by repayment to Investec of the debt due to it and, second, by distribution of the exit fee as follows: