1.15 The Department, the Armouries and their advisers had discussions with a bidder led by 3i Group plc, leading to the signing of an agreement in December 1993 which established a joint venture between the Armouries and RAI. Responsibilities of each party in the joint venture are shown in Figure 6 and the contract structure in Figure 1.
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| The Royal Armouries' objectives for the project |
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| The Royal Armouries set a number of objectives for the new museum project. ■ To provide a mechanism for the public and private sectors to make financial contributions and allow for the sharing of returns ■ To achieve the maximum risk transfer to the private sector ■ To obtain maximum private sector funding ■ For the construction and operation of the new museum to be under private sector control ■ To enable the Royal Armouries to maintain control over the curatorial and heritage components of the project Source: The Royal Armouries |
1.16 As part of the deal the Trustees acquired the museu site and the area immediately surrounding it under a 999 year head-lease from the owner, British Waterways Board. Under this lease rent of £185,000 a year became payable to the British Waterways Board from the opening of the museum, rising to £625,000 a year after 40 years. The Armouries, in turn, sub-let the museum site to RAI for 60 years from the opening of the museum. Under the sub-lease, RAI reimbursed the Armouries for the annual rental payable to the British Waterways Board.
1.17 The agreement which the Armouries negotiated met strategic aim of getting a new museum in order to display more of its collection. The agreement also met most of the objectives it set for the project. In particular: it permitted the Armouries and RAI to deliver their financial contributions to the project, and allowed both parties a share in the future development gain; it transferred a substantial amount of risk to the private sector; the construction and operation of the museum were largely under private sector control; and the Armouries retained control over the activities relating to its statutory functions, including care and maintenance of the collection.