42IE Consort Tam.41

TIDM42IE

RNS Number : 8142A

Consort Healthcare (Tameside) PLC

24 January 2024

RNS REGARDING ADJUDICATION AND ACTUAL/POTENTIAL EVENTS OF DEFAULT

"Consort Healthcare (Tameside) plc

Adjudication, Service Failure Deductions and Actual/Potential Events of Default

London, 24 January 2024 - Consort Healthcare (Tameside) plc ("Consort Healthcare (Tameside)", a project company for the Private Finance Initiative (PFI) concession contract to design, construct, finance, maintain and manage the lifecycle costs of new hospital facilities in Tameside for the Tameside & Glossop Integrated Care NHS Foundation Trust (the "Trust") provides an update regarding the adjudication referenced in the Company's previous announcement on 23 October 2023 regarding alleged defects in the Tameside hospital ("the Adjudication").

A final decision in the Adjudication was handed down by the relevant adjudicator on 19 January 2024. Under the final decision, the quantum awarded as payable (subject to the Standstill, as defined below)) by Consort Healthcare (Tameside) in the Adjudication is GBP8,835,493.96 (the "Adjudication Quantum"), which relates to the project contract months of September 2020 to December 2021.

Consort Healthcare (Tameside) is still considering the impact on its financial position of the final decision handed down in the Adjudication and will further update the market in due course.

However, in relation to the financial position of Consort Healthcare (Tameside), please note that, pursuant to a standstill entered into with the Trust on 27 May 2022 (the "Standstill"), the Trust is prevented from seeking to recover the Adjudication Quantum or set off the Adjudication Quantum against the unitary charge payable under the relevant project agreement prior to the date falling six weeks after the handing down of the relevant adjudicator's final decision (with the relevant six week period being the "Standstill Period").

The Trust has accrued but not levied further Service Failure Deductions under (and as defined in) the relevant project agreement for the period from January 2022 to today's date, which amounts are also subject to a standstill (the "Further SFDs") but do not form part of the Adjudication Quantum. This standstill is now due to expire six weeks following the issuance of the final decision of the relevant adjudicator. It is currently unclear what the quantum of the Further SFDs is but this could potentially be material.

Absent an agreement or arrangement with the Trust as to the treatment and payment of the Adjudication Quantum and any liability in respect of the Further SFDs which may be agreed or determined, or forbearance by the Trust of the Adjudication Quantum or any further liability in respect of the Further SFDs once agreed or determined, it is possible that the Adjudication Quantum (and/or the Further SFDs) may have an impact on the ability of Consort Healthcare (Tameside) to either (i) meet its covenants under the GBP93,300,000 1.9810 per cent. index-linked guaranteed secured bonds (the "Bonds") it has issued or (ii) continue to trade. Consort Healthcare (Tameside) is in discussion with its stakeholders. Consort Healthcare (Tameside) will update the market in due course as to whether or not any agreement can be reached with the Trust.

The Further SFDs will need to be agreed or determined under the project dispute resolution procedure and, if agreed or determined to be material, may have an impact on the ability of Consort Healthcare (Tameside) to meet its covenants under the Bonds, depending on implementation by the Trust and any agreement between Consort Healthcare (Tameside) and the Trust. Any liability for such Further SFDs has not yet been agreed or determined but such liability could potentially be material.

Subject to the terms of a bond financial guarantee dated 18 September 2007, Ambac Assurance UK Limited ("Ambac") has guaranteed the payment with respect to any scheduled payment date of (a) the sum of scheduled interest payable on such scheduled payment date and (b) scheduled principal payable on such scheduled payment date.

In connection with the guarantee provided by Ambac, Consort Healthcare (Tameside) has entered into a c ollateral deed dated 18 September 2007 (the "Collateral Deed") with (amongst others) Ambac (in its capacity as the relevant bond financial guarantor).

Pursuant to its obligations under the Collateral Deed, Consort Healthcare (Tameside) has notified Ambac of (i) an Event of Default (as defined in the Collateral Deed) in respect of the Debt Ratio financial covenant under the Collateral Deed and (ii) various Potential Events of Default (as defined in the Collateral Deed) which may become Events of Default once the Standstill Period expires.

The various Potential Events of Default in question directly or indirectly relate to (i) the potential consequences of the final decision in the Adjudication and/or (ii) the potential levying of the Further SFDs.

Ambac and Consort Healthcare (Tameside) have commenced discussions with other material stakeholders in connection with the relevant project.

THIS ANNOUNCEMENT CONTAINS INFORMATION THAT QUALIFIES OR MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU NO. 596/2014), AS IT FORMS PART OF THE UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. "

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