THE council says it has put measures in place to mitigate the ‘maximum potential exposure’ following its failed investment into Together Energy.

As recently reported, according to a council report, the ‘likely maximum exposure’ to the council is the potential loss of £18 million.

The energy company, which the council owned a 50 per cent stake in, announced it was to cease trading immediately back in January.

The issue featured in a report to the audit and corporate governance committee for its recent meeting.

The report said, at the time of going into administration, the council faced a potential liability of £66.17 million – consisting of a £29.32 million Orsted guarantee, £18.85 million of loans and £18 million of preference share capital.

It also stated that Together Energy Limited (TEL) was a ‘well hedged’ company.

“Following TEL liquidating its hedge position, it is forecast that TEL will received a substantial net return after full repayment of the Orsted liability over the period to October 2023,” it added.

“The administrators have advised the council that based on current information they anticipate that the council’s loans (£18.850m) will be repaid in full and there should be no call under its guarantee to Orsted.

“However, the administrators cannot assess the potential level of recovery, if any, against the equity investment.

“Therefore based on information available at this time, the likely maximum exposure to WBC is the potential loss of the £18m equity investment.

“This has been fully budgeted for in the council’s budget, and since the purchase was undertaken using the capital financing regime any potential loss is already funded through the ongoing MRP charges, and therefore, there will be no further impact on the council taxpayer.

“The council set up a strategic risk reserve to mitigate any under performance of the diversified investment portfolio and makes a yearly contribution to the reserve.

“During 2021/22 the council contributed £4m to the strategic risk reserve. As at 31 March 2022 the reserve stood at £32.782m.”

The council has issued a statement on the matter.

A spokesman said: “We have been advised by the administrators that, based on the current information, they anticipate that the our loans of £18.85 million will be repaid in full and there should be no call under the guarantee to Orsted.

“It is important to allow the administrators to complete their work to ensure the maximum returns for all of the company’s creditors. We await the final outcome of the administration process to determine the final position.

“We have, however, put in place measures to mitigate this maximum potential exposure, which has been budgeted for, and there should be no further impact on Warrington residents.”