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As the Strategic Legal Adviser to the Kokoon Board and a consultant at Fladgate LLP, I oversee all legal matters for the corporation. I am providing this statement to clarify the circumstances surrounding Kokoon's decision to withdraw from its development plans in Gran Canaria, Spain.
Kokoon has been attempting to develop a large medical resort on the island for several years but was unable to secure the necessary approvals. Our first meeting regarding the property in La Aldea with the local government occurred in September 2018, followed by numerous subsequent discussions with the property seller. In May 2021, the local government informed us that they could not grant approval for the project in La Aldea unless we significantly scaled it back, reducing the hotel from seven floors to three and consolidating from two hotels to one. These modifications were not viable for Kokoon, and as a result, we declined the proposal.
Our Spanish legal advisers proposed several alternative locations, but these also failed to provide the necessary legal assurances we required. We encountered similar obstacles, with the government ultimately unwilling to accommodate Kokoon's presence on the island. Concurrently, we were acquiring properties in Arguineguín, also in the south of the island, to establish a smaller clinic. This facility was designed to complement the larger medical resort, providing day-to-day services for local residents as well as care for tourists.
Given the challenges in Gran Canaria, we ultimately decided to abandon the proposed clinic in Arguineguín. Although Kokoon had invested approximately €1 million in renovations (and another €1 million in local lawyers and advisers) and was prepared to open the clinic in January 2023, the property seller failed to obtain the required approvals for the main building until 2025. Moreover, the seller could not provide a written guarantee that the facilities would be authorized for advanced surgical procedures and other specialized activities we intended to conduct. Despite repeated assurances over two years that approvals were imminent within the next three months, no such commitments materialized in writing. Consequently, we issued an ultimatum: without formal confirmation of unrestricted use, we would withdraw. As they were unable to provide this, we proceeded to exit the project.
Without approval for the primary resort, Kokoon explored nearby alternatives accessible by short flights, such as Western Sahara or Morocco. During this review process, we reassessed our options with a fresh perspective and determined that the optimal locations for both the sports resort and the main medical resort were in Greece. Based on this strategic pivot, the company also pursued prime living developments in five major cities in Norway, which aligned more effectively with our goals.
To provide further context, this was not a minor undertaking; it would have required an additional $60 million in investments for equipment and marketing to establish it as a functional hub. As Kokoon's corporate lawyer and adviser, I could not recommend to the Board of Directors that we proceed under these uncertain conditions. Accordingly, Kokoon has fully withdrawn from its initiatives in Gran Canaria. Kokoon also owns two other properties in the Canary Islands. My advice to the company is to retain them, as the local market has declined significantly; we should not sell them, as doing so would result in financial losses, but instead hold them since they are free of debt and fully paid, allowing them to remain standing unused if necessary.
Clive Garston
Strategic Legal Adviser to the Kokoon Board, Fladgate LLP
I am an experienced corporate lawyer specialising in equity capital markets transactions and public and private M&A in many diverse sectors.
I have advised UK and international issuers on IPOs and secondary fundraisings and have frequently represented Nomads and financial advisers. I have also acted for publicly quoted companies on both private and public M&A transactions. I am no longer executing legal transactions, but am working in an advisory and consultancy capacity to public and private companies particularly in relation to corporate transactions.
I have served as a director and chairman of a number of public and private companies. I am currently chairman of Warpaint London PLC, Fulcrum Metals PLC and a consultant at Fladgate LLP.
I was chairman of the corporate finance forum of the CISI for six years until June 2021. I have also been a member of both the North West and London councils of the CBI. For six years, I was a member of the corporate governance committee of the QCA and an author of two editions of its corporate governance guide.