TIDM40CZ
RNS Number : 5675X
Catalyst Healthcare (Manchester)Fin
30 April 2019
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
Adjudication Decision - Deductions from Service Payments
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.
As previously notified, Central Manchester University Hospitals
NHS Foundation Trust (now, Manchester University NHS Foundation
Trust) (the "Trust") has issued unavailability notices to the
Issuer's associated company, Catalyst Healthcare (Manchester)
Limited ("Project Co"), because of alleged defects in respect of
the fire doors and smoke doors (the "Doors") at the Central
Manchester University Hospital (the "Hospital") forming part of
Project Co's PFI project.
The Issuer and Project Co have been working (and continue to
work) with the Trust, Lend Lease Construction (EMEA) Limited (the
"Contractor") and its supply chain to resolve these issues. The
vast majority of the Doors have now been replaced.
The Trust has advised that, to the end of February 2019, it has
accrued unavailability deductions of approximately GBP23.3 million
in relation to the Doors. There is a dispute as to the Trust's
entitlement to accrue these deductions at all (the "Dispute"). The
Trust has deferred taking any sum in relation to these
unavailability deductions (the "Deferred Deductions").
In order to assist them to resolve the dispute as to whether or
not Project Co is liable to the Trust for any unavailability
deductions in relation to the Doors, a number of legal issues and
certain technical and factual issues relating to two of the Doors
(the "Adjudication Doors") were referred to Stephen Furst QC (the
"Adjudicator") to determine as an adjudicator.
During the course of the adjudication, it was agreed between
Project Co and the Trust that no availability deductions could be
levied by the Trust in relation to the Adjudication Doors because
the alleged defects were remedied before availability deductions
could accrue under the terms of the Project Agreement.
In his Decision dated 25 April 2019, the Adjudicator determined
that the alleged defects in the Adjudication Doors did not breach
the Safety Condition. This means that the Trust would not have been
entitled to levy availability deductions in relation to the
Adjudication Doors even if the alleged defects had not been
remedied within the timescales required under the Project
Agreement. Given that the alleged defects in the Adjudication Doors
are materially similar to the alleged defects in the rest of the
Doors, it is very likely that the Safety Condition will not have
been breached in respect of any of the Doors and that the Trust is
not entitled to the Deferred Deductions.
The Adjudicator's Decision is binding on the parties unless the
Trust brings court proceedings and the court reaches a different
conclusion to the Adjudicator in the future.
The Trust has not yet commenced court proceedings or indicated
that it intends to do so. The Adjudicator's Decision supports
Project Co's position that any court proceedings pursued by the
Trust would be very unlikely to succeed.
However, if the Trust were to be successful in any such court
proceedings:
1 Project Co considers that it would be able to recover the
Deferred Deductions in full from the Contractor and/or other parts
of Project Co's supply chain;
2 there is a low risk that the quantum of the Deferred
Deductions and the timing of any recovery may affect project
cashflows 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; and
3 the Trust would have grounds to terminate the Project
Agreement because of the level of deductions incurred in the
previous 12 months. However, Project Co and the Issuer are hopeful
that matters would be resolved amongst the parties before it
reached that stage.
Project Co and the Issuer continue to take legal advice with
respect to the matters mentioned in this announcement and keep the
matter under continual review.
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
c/o Albany SPC Services Limited,
3rd Floor,
3-5 Charlotte Street,
Manchester,
M1 4HB
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
30 April 2019
David Tapply
General Manager
Catalyst Healthcare (Manchester) Ltd
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END
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