TIDM40CZ
RNS Number : 6996U
Catalyst Healthcare (Manchester)Fin
26 November 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
Court Proceedings - 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:
1 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;
2 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;
3 the Trust has advised that, to the end of June 2019, it has
accrued unavailability deductions of approximately GBP24.3 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");
4 in order to seek to assist with the resolution of the
Dispute,, a number of legal issues and certain technical and
factual issues relating to two of the Doors at the Hospital (the
"Adjudication Doors") were referred to an adjudication (the
"Adjudication"). The parties agreed that Stephen Furst QC would be
appointed as the adjudicator (the "Adjudicator") in respect of the
Adjudication;
5 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 in such Doors were remedied before availability
deductions could accrue under the terms of the Project
Agreement;
6 in his Decision dated 25 April 2019, the Adjudicator
determined that the alleged defects in the Adjudication Doors did
not breach the Safety Condition (as defined in the Project
Agreement);
7 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; and
8 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.
By way of a letter dated 20 June 2019, the Trust confirmed that
it did not accept the Decision and that it, therefore, maintained
its claim against Project Co in relation to the Dispute.
Project Co considers that it is in the interests of both it and
the Trust for the Dispute to be resolved as quickly and cost
effectively as possible.
Project Co has, therefore, issued Part 7 court proceedings
against the Trust, the Contractor and Lendlease Construction
Holdings (Europe) Limited (the "Guarantor") (the "Part 7
Proceedings").
In the Part 7 Proceedings, Project Co's position is that:
1 the Trust is not entitled to the Deferred Deductions in
relation to the Doors as the alleged defects do not amount to a
breach of the Safety Condition; and
2 in the alternative, if the Trust is entitled to the Deferred
Deductions, then the Contractor is liable to indemnify Project Co
for any damages which it suffers (including the Deferred Deductions
and any legal costs).
If the Trust is successful in defending the Proceedings and it
were to deduct the Deferred Deductions:
1 Project Co considers that it would immediately be able to
recover such Deferred Deductions from the Contractor and/or the
Guarantor; and
2 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
26 November 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DOCBQLFLKFFEFBX
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