TIDM40CZ
RNS Number : 7265W
Catalyst Healthcare (Manchester)Fin
28 April 2016
THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF
HOLDERS OF THE BONDS. IF HOLDERS OF THE BONDS ARE IN ANY DOUBT AS
TO THE MEANING OR IMPORT OF THE CONTENTS OF THIS NOTICE OR REQUIRE
FURTHER ADVICE, THEY SHOULD CONSULT THEIR OWN INDEPENDENT
PROFESSIONAL ADVISERS (INCLUDING IN RESPECT OF ANY TAX
CONSEQUENCES).
Catalyst Healthcare (Manchester) Financing PLC (the
"Issuer")
GBP218,050,000, 2.411 per cent. Index-linked Guaranteed Secured
Bonds due 2040
(including up to GBP38,000,000 Variation Bonds) unconditionally
and irrevocably guaranteed as to scheduled payments of principal
and interest pursuant to a bond financial guarantee issued by AMBAC
Assurance UK Limited (ISIN XS0208052265) (the "Bonds")
NOTICE
To the holders of the Issuer's Bonds
Settlement Agreement with Central Manchester University
Hospitals NHS Foundation Trust
Unless otherwise provided, terms defined in the Master
Definitions Schedule dated 8 December 2004 (as the same may be
amended, varied or supplemented from time to time) shall have the
same meaning where used in this Notice.
This announcement is made further to the RNS Announcement made
by the Issuer on 25 August 2015 relating to unavailability notices
issued by Central Manchester University Hospitals NHS Foundation
Trust (the "Trust") to the Issuer's associated company, Catalyst
Healthcare (Manchester) Limited ("ProjectCo"), in relation to
alleged defects in the fire stopping at Central Manchester
University Hospitals (the "Hospital") ("the Alleged Firestopping
Defects").
As notified in the 25 August 2015 RNS Announcement, as of that
date, the Trust claimed that it was entitled to make unavailability
deductions in relation to the Alleged Firestopping Defects
totalling GBP11.2 million.
Since the 25 August 2015 RNS Announcement, the Trust has
deferred additional unavailability deductions in respect of the
Alleged Firestopping Defects. As of the date of this RNS
Announcement, the total level of unavailability deductions claimed
by the Trust in respect of the Alleged Firestopping Defects totals
approximately GBP33,000,000.
All unavailability deductions applied by the Trust to date have
been passed down in full to ProjectCo's supply chain as, in
accordance with legal advice, ProjectCo is permitted to do under
the terms of its sub-contracts. The Trust's entitlement to make
such unavailability deductions has been disputed by ProjectCo and
by its supply chain.
The Trust, ProjectCo and Lend Lease Construction (EMEA) Limited
(the "Contractor") have now entered into a confidential settlement
in relation to the Alleged Firestopping Defects (the "Settlement
Agreement"). The Settlement Agreement will not become fully
effective until ProjectCo obtains written consent from the Majority
Creditors and Credit Providers (the "Funders").
The Settlement Agreement, if it becomes fully effective, will
settle the claimed and potential future unavailability deductions
in respect of the Alleged Firestopping Defects and prevent the
Trust terminating the Project Agreement in reliance on such
unavailability deductions.
The key provisions of the Settlement Agreement are that:
1 the Trust's claims for unavailability deductions (regardless
of whether they have been levied or deferred) in relation to the
Alleged Firestopping Defects are waived and released;
2 the Contractor will pay a sum of money to ProjectCo in
instalments (the "Settlement Monies") and Project Co will pay the
Settlement Monies to the Trust;
3 the Trust will pay to ProjectCo all the sums which it has
deducted from monthly service payments in respect of the Alleged
Firestopping Defects and Project Co will repay those sums as it has
withheld and, as applicable, to its supply chain;
4 the Trust, at its own cost, will assume responsibility for and
carry out and properly complete all remedial works relating to the
Alleged Firestopping Defects;
5 the Trust will undertake responsibility for completing the
works and estimates it will take them a further 18-24 months to
complete;
6 the Trust will not apply any unavailability deductions in
relation to the Alleged Firestopping Defects and the remedial works
which it will now undertake;
7 the Trust will not seek to terminate the Project Agreement
based on any historic or future unavailability deductions in
relation to the Alleged Firestopping Defects;
8 a new regime for unavailability deductions has been agreed
(the "Future Availability Regime") which means that disputed
unavailability deductions can generally now only be applied once a
formal dispute resolution process has been adhered to by the
parties. Further, under the Future Availability Regime,
unavailability deductions will generally begin to accrue later than
currently provided for under the Project Agreement;
9 ProjectCo will make a contribution as part of these
arrangements, the effect of which will not have a material adverse
effect on the cover ratios; and
10 ProjectCo has agreed to make certain adjustments to the
insurance costs sharing provisions in the Project Agreement.
ProjectCo is seeking the consent of the Funders to the terms of
the Settlement Agreement in accordance with the terms of the
Security Trust and Intercreditor Deed.
If such consent is not received by 31 May 2016 (or such later
date as agreed by the Trust, ProjectCo and the Contractor) (the
"Long Stop Date"), then the Settlement Agreement will lapse and be
of no further effect save that the Trust will not be entitled to
levy unavailability deductions in relation to the Alleged
Firestopping Defects for the period between 19 April 2016 and one
month after the expiry of the Long Stop Date.
If the Settlement Agreement were to lapse and the Trust were to
apply the unavailability deductions which it has deferred and/or
make further unavailability deductions in relation to the Alleged
Firestopping Defects, legal advice that ProjectCo has received
indicates that it will be able to allocate and recover these in
full from the Contractor and/or ProjectCo's wider supply chain.
However, depending on the quantum of the unavailability deductions
and the timing of any recovery, project cash flows may be adversely
affected such that it would have a material impact on the ability
of the Issuer to comply with its obligations to make scheduled
payments of principal and interest on the Bonds.
If the Trust was to apply a significant part of the
unavailability deductions which it has deferred and should it be
found to be entitled to do so, it is possible that the Trust would
be entitled to terminate the Project Agreement as a result of
ProjectCo having incurred this level of unavailability deductions
in the previous 12 months.
A further update will be given in due course.
Enquiries
If you have any enquiries, please direct them to the Issuer
The Issuer
Catalyst Healthcare (Manchester) Financing PLC
Albany SPC Services Ltd
Adamson House
Towers Business Park
Wilmslow Road
Didsbury
Manchester M20 2YY
Attention: Ailison Mitchell
The Principal Paying Agent
The Bank of New York Mellon,
International Corporate Trust Services,
Merck House, Seldown,
Poole, Dorset,
BH15 1PX
The Bond Trustee
Law Debenture Trustees Limited
Fifth Floor, 100 Wood Street,
London
EC2V 7EX
This notice is given by Catalyst Healthcare (Manchester)
Financing PLC
28 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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