CONSORT HEALTHCARE (TAMESIDE)
PLC
The outstanding 1.9810 per
cent. Index-Linked Guaranteed Secured Bonds due
2041
ISIN
XS0321115130
(the
"Notes")
SETTLEMENTS WITH THE TAMESIDE
& GLOSSOP INTEGRATED CARE NHS FOUNDATION TRUST AND EQUANS
SERVICES LIMITED
London, 10 December 2024 - Consort
Healthcare (Tameside) plc (the "Company"), a project company for the
Private Finance Initiative (PFI) concession contract (the
"Project Agreement") to
design, construct, finance, maintain and manage the lifecycle costs
of hospital facilities in Tameside for the Tameside & Glossop
Integrated Care NHS Foundation Trust (the "Trust") provides the following update
regarding settlements reached between the Company and each of the
Trust and Equans Services Limited.
In this announcement, words and
expressions defined (expressly or by reference) or interpreted in
the trust deed constituting the Notes shall, unless otherwise
defined herein, bear the same meaning herein.
Settlement with the
Trust
The Company has entered into a deed
of settlement and variation in relation to the Project Agreement
with the Trust in order to settle certain claims between them, to
formally discontinue the restructuring plan initiated in April
2024, and to amend the terms of the Project Agreement.
The settlement shall take effect as
from 2 December 2024 (the "Settlement Date") pursuant to the terms
of a deed of settlement and variation (the "Settlement Deed"). The Settlement
Deed waives certain existing claims of the Trust against the
Company, provides a mechanism for the identification and
rectification of existing defects at the hospital site within
agreed timeframes and in a financially sustainable manner, and
establishes certain procedures to minimise the risk of, and ensure
the timely resolution of, future disputes between the parties, as
more particularly set out below:
· The
Company will pay to the Trust a settlement sum (the "Settlement Sum"), by way of a sculpted
reduction to the monthly service payments due to the Company under
the Project Agreement for the remainder of its term. The
Settlement Sum is in addition to the sums previously deducted or
withheld by the Trust. This amount is subject to indexation in accordance
with the terms of the Project Agreement. The Company and the
Trust are under an obligation to meet in the first quarter of each
year to reassess and discuss (acting reasonably) whether, if both
parties agree, a revised repayment profile should apply.
· In
consideration of the payment of the Settlement Sum the Trust will
waive all financial claims and entitlements: (1) to levy deductions
from monthly service payments ("Service Failure Deductions") and
service failure points ("Service
Failure Points") in relation to any matters detailed in
Performance Monitoring Reports issued by the Company pursuant to
the terms of (and as defined in) the Project Agreement prior to the
Settlement Date; and (2) referred to by either party and determined
in the prior adjudication commenced on 30 May 2022, relating to
certain matters in dispute between the Company and the
Trust.
· Within
two weeks of the Settlement Deed date the Company and the Trust
will file and serve a notice of discontinuance of the restructuring
plan proceedings commenced under Part 26A of the Companies Act
2006, and the Trust shall not enforce the associated order for its
costs.
· The
Company is required to carry out and complete certain existing
rectification works being undertaken by the Company at the hospital
site in respect of fire protection, grounds and gardens and
rendering (the "Rectification
Works"). Associated costs in respect of the Rectification
Works will be for the account of the Company.
· In
addition to the Rectification Works the Trust is in the process of
finalising a centre of best practice ("COBP") survey at the hospital
site, which includes but is not limited to an asset register and
condition appraisal, an environmental condition validation report
and a compliance audit report. Although currently only provided in
draft form, such draft COBP survey highlights non-compliant items
requiring further investigation and/ or a potentially extensive
rectification programme by the Company (the "COBP
Works").
· If any
future event or matter occurs or is identified where the Company
reasonably considers that the primary cause of such event or matter
may be related to a design or construction defect in multiple
functional units of the hospital, the Company may require that a
surveyor is jointly appointed to establish the cause of such event
or matter and the programme of works necessary to rectify the same
("Future Works", and
together with the Rectification Works and the COBP Works the
"Necessary
Works").
· An
outline programme of Rectification Works has been included in the
Settlement Deed, which shall be later updated once final
investigative works are complete and the works categorised
according to relative complexity. The Settlement Deed
contains a detailed mechanism for the Company to submit, and the
Trust to comment and agree (on defined grounds), the proposed
classification of the outstanding Rectification Works and the
required programmes for such other Necessary
Works.
· Relief
from Service Failure Deductions or Service Failure Points is
provided for in respect of the carrying out of the Rectification
Works during the period from the date of the Settlement Deed to the
relevant longstop dates set out in the agreed final programme of
Rectification Works or (absent agreement) stated in the Settlement
Deed, except where the Trust is required to decant a functional
unit (in which case the Trust and the Company are required to seek
to reasonably agree suitable alternative accommodation or other
reasonable mitigation measures). If the Rectification Works
are not completed by the relevant longstop dates, the Trust retains
its right to apply Service Failure Deductions and Service Failure
Points as per the existing payment mechanism of the Project
Agreement.
· If any
deductions accrue in respect of the decant of functional units, the
Trust and the Company will seek to agree (acting reasonably) to
amortise the same by way of a sculpted reduction to the monthly
service payments over an agreed period (or the remainder of the
concession, in the absence of agreement). Subject to a right for
the Company to repay any outstanding amortised decant deductions at
any time, the Company shall be subject to a distribution block to
its shareholders until such time as all such decant deductions are
fully repaid.
· Except
where the Trust is required to decant a functional unit and
suitable alternative accommodation or other reasonable mitigation
measures cannot reasonably be agreed, the Company receives
relief from Service Failure Deductions or Service Failure Points in
respect of the carrying out of the COBP Works and any Future Works:
(1) during any period in which the relevant surveys to are being
conducted, until such time as the surveyor's final report is
issued; and (2) a period of 14 months (for COBP Works) or 12 months
(for Future Works) from the date such final report is issued.
This period may also be extended where the programming of the
Necessary Works require the procurement of complex design
services.
· The
Company is entitled to an extension of relevant relief periods
where the Trust is unable to provide the Company or its contractors
or surveyors access to the hospital site at the times set out in
the relevant agreed works programme.
· If any
specified supervening events occur (defined on the same basis as
the Project Agreement), any affected relief periods shall be
extended by such period as is fairly and reasonably attributable to
any delay caused by such event or breach.
· The
Settlement Deed provides for certain mechanisms to reduce the risk
of future disputes arising, including the establishment of a
steering committee of senior representatives of the Trust, the
Company and the FM Service Contractor to oversee the delivery and
co-ordination of such rectification works and provide a forum
for strategic discussion, and the reinstatement of quarterly
liaison committee meetings in accordance with the existing terms of
the Project Agreement.
· The
Project Agreement has been amended to include a fast-track dispute
resolution procedure in the event of any future dispute of a
Performance Monitoring Report or monthly payment report (and
certain other matters), and to streamline the appointment process
for adjudicators under the adjudication process.
· The
Project Agreement has been amended to clarify that the Company will
not be subject to deductions in the event that any Necessary Works
are completed in advance of the agreed times.
· The
Project Agreement has been amended to state that, if it is
terminated for ineffectiveness, as a result of the Settlement Deed,
termination shall be on an equivalent basis as for force
majeure.
Settlement with the FM
Service Contractor
The Company has entered into a deed
of settlement and variation in relation to the FM Service Contract
with Equans Services Limited (the "FM Service
Contractor"), in order to settle
certain claims between such parties and to amend the terms of the
FM Service Contract (the "FM
Deed").
The FM Deed acknowledges the
variations to the Project Agreement implemented under the
Settlement Deed, waives certain existing claims as between the FM
Service Contractor and the Company, requires the FM Service
Contractor to provide support (on a time and cost basis) to the
Company in the Company carrying out the Necessary Works and relief
for the FM Service Contract in respect of the same, and flows-down
equivalent mechanisms to minimise disputes risk as are contained in
the Settlement Deed.
Financial Position and
Forecasts
· The
Company confirms that it had sufficient funds available to meet
scheduled debt service in September 2024; however all its reserve
accounts have now been fully drawn or to a minimal
level.
· Under
the Company's base case financial forecast, the funding of the debt
service reserve account, the lifecycle reserve account and the
change in law reserve account (collectively the "Reserve Accounts")
are expected to build up gradually over several years.
· Under
the Collateral Deed, transfers to and from the debt service reserve
account are not included in periodic debt service coverage ratio
calculations however transfers to and from the lifecycle reserve
and change in law reserve are.
· The
Company is currently in discussions with Ambac Assurance UK Limited
(the Bond Financial Guarantor and Controlling Creditor) in relation
to a package of short to medium term relaxations and/ or waivers of
the existing financial covenant requirements as a result of
forecast event of default covenant breaches primarily as a result
of a combination of historical performance, the payment of the
Settlement Sum, costs estimated in connection with Necessary Works
and the future build-up of the Reserve Accounts to the required
levels under the Collateral Deed.
· The
base case financial forecasts and the estimated level of cover
ratios referred to above will, however, be subject to uncertainty
which potentially could be material. There are various factors that
could influence this including, but not limited to, the
Rectification Works and COBP Works cost estimates, the Company's
ability to complete such works within the time frames agreed, the
level of decant required to remediate defects comprised for such
works of a more complicated nature, and any unknown defects or
circumstances not currently anticipated.
This announcement is given by the
Company.
Enquiries:
consorttameside@vercitygroup.com
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 UNITED KINGDOM
DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018,
AS AMENDED.
Forward-Looking Statements
Certain statements in this document
constitute forward-looking statements. Such statements
involve known and unknown risks, uncertainties, and other factors
that may cause actual results, performance, or achievements to be
materially different from those expressed or implied by such
statements. These statements are based on management's
current expectations and beliefs and are subject to a number of
risks and uncertainties. The company undertakes no obligation to
update these forward-looking statements, except as required by law.
Readers are cautioned not to place undue reliance on these
forward-looking statements.
