Millions of pounds of public money loaned to a Tyneside firm has been written off.
The North East Combined Authority (NECA) has agreed to a substantial write down of a loan given to Tyne Pressure Testing.
The Camperdown-based company, which provides specialist testing chambers for the energy and defence sectors that can simulate deep sea conditions, had been loaned around £5 million by the North East Local Enterprise Partnership (LEP).
But the firm will now only have to pay back £435,000 of an outstanding £3.48 million balance.
The £3 million waiver was signed off by North East mayor Kim McGuinness and council leaders at a meeting in January.
A NECA spokesperson told the Local Democracy Reporting Service that the decision would help the business, which is part of the British Engines group, move “to a sustainable financial footing” and that the authority “takes prudent investment of public funds incredibly seriously”.
The original loan, funded from the North East Investment Fund, was signed off by the LEP in 2015 to help the company build a testing facility for the oil and gas industry. The debt was inherited by NECA last year following the agreement of the region’s devolution deal, which saw the LEP’s responsibilities merged into the new authority.
NECA said this was the first project backed by the North East Investment Fund to have a loan written down since its launch in 2012, adding the scheme had created more than 1,900 jobs through investment of more than £120 million across 35 projects.
It blamed the impact of the Covid-19 pandemic and a decline in the oil and gas industry since 2018, saying Tyne Pressure Testing had chosen to refocus on new markets like offshore wind.
The NECA spokesperson added: “The decision to write down the loan will allow the business to diversify into new sectors and move to a sustainable financial footing. Acting in this way strengthens the company position to provide important services to the offshore industry in the region, and averts the risk of the full value of the loan being lost.
“The Combined Authority (CA) has been working closely with TPT to maximise repayment of the loan, exploring a detailed range of options, and sought expert external advice to provide a way forward. The North East CA Cabinet was advised to write down the loan, this recommendation was accepted, alongside arrangements for a repayment which moves the business to a more sustainable footing.
“The CA takes prudent investment of public funds incredibly seriously and all decisions are examined by a thorough appraisal process, by a range of panels and experts, and with ongoing monitoring of performance.
“However, there will always be an element of risk as market conditions change, especially when trying to simulate business growth in new industries.”
A spokesperson from Tyne Pressure Testing commented: “We are extremely appreciative of the support given by the NELEP and latterly NECA in what has been difficult market conditions in the oil and gas sector since 2018, both pre- and post-COVID. A situation many businesses have faced in the UK in the important drive for de-carbonisation.
“With the support of NECA, BEL Valves and Newcastle University the business has had to regrow its customer base from the ground up and find new market sectors, which includes the renewables sector. The support of the three partners has given us a sustainable platform for future growth, and continued investment in our people and facilities.”
