YLE CEO Jungner: Lease contract with Helsinki Music Centre still wide open

print this

According to Mikael Jungner, the CEO of the Finnish Broadcasting Company YLE, the company has made a fresh start in its negotiations over a lease contract with the new Music Centre planned for downtown Helsinki.
      As a tenant, YLE would not be willing to commit itself to pay for any increases in the construction costs of the Music Centre.
      "The original plan has become void, and a new concept must be created for the construction of the Music Centre, with YLE being involved as a tenant", said Jungner on Tuesday.
      "The lease contract between YLE and the Music Centre is still wide open, and I hope that a decision can be arrived at which will receive the approval of both YLE, the City of Helsinki, and the Finnish state", Jungner continued.
     
Two alternative investors have been found who are willing to finance the share formerly taken up by YLE. Both of the prospective sponsors are public companies.
      The initial idea of the state and the City of Helsinki includes that in addition to the operating lease for the use of the property, YLE would be liable for a capital lease to the investor according to normal economic profit targets.
      YLE is still one of the shareholders in the company developing the music centre, even though it has pulled out of the construction project.
     
Apparently, YLE would like to have a fixed cap on the lease, assumes Aulis Kohvakka, the CEO of Senate Properties, the government-owned enterprise responsible for managing, developing, and letting the property assets of the Finnish state.
      "I do not know what kind of calculations YLE has made, while the received private investment offers are really competitive. If YLE believes that it can be given a free ride in this situation, it is not going to happen. The state and the city cannot start subsidising YLE’s operations", noted Kohvakka.
      Kohvakka reports that the investment offers are based on the assumption that YLE will sign a lease contract of not less than 15 years.
     
According to Mikael Jungner, negotiations are carried on every day, while no deadline for the talks can be set. Neither is any settlement in sight.
      Jungner notes further that one must not forget that the state and the capital both have a higher capacity to take risks than YLE has.
      However, Finance Director Tapio Korhonen of the Economic and Planning Centre of the City of Helsinki stresses that the idea has been to seek another financier to replace YLE as a sponsor. Moreover, the share of the broadcasting company is to be paid by the profits from YLE’s rental, he adds.
     
Korhonen notes that urgent decisions are required from YLE in order that no further expenses will result from delays in the schedule.
      After all, the present tenders were submitted already last summer, and at some point even the construction companies are bound to lose their patience.


Previously in HS International Edition:
  Two private investors available for Helsinki Music Centre (8.1.2008)
  Finnish Broadcasting Company pulls out of Music Centre construction (2.11.2007)

Helsingin Sanomat