21 October 2004 LAWFUEL – Law, legal, law firm newsThe first PFI project to be funded under the Government’s credit guarantee finance (CGF) scheme reached financial close on 15 October 2004. Clifford Chance acted for Bank of Scotland as guarantor in this pilot deal, continuing the firm’s impressive track record of facilitating innovation in the hospital PFI sector.
The project, a new £170,000,000 oncology unit at St James’s Hospital in
Leeds, is the first PFI to be funded by the Secretary of State for Health
under a loan facility with Catalyst Healthcare (Leeds) Limited, a consortium
owned by Bovis Lend Lease and Bank of Scotland.
Instead of the private sector providing funding directly to the project, as
is the case with other PFIs, CGF separates funding and risk taking by
retaining the involvement of private financiers as risk takers, but funding
projects through Government gilts; thus saving the cost of the private
sector securing funds, which is separate from the cost of it taking risks. Bank of Scotland has provided a guarantee of Catalyst’s scheduled
indebtedness to the Secretary of State.
Lender control over the project
will remain with Bank of Scotland and other banks that it expects to bring
on board as co-guarantors. Catalyst is subject to a typical PFI project
covenant and default package under the guarantors’ documents.
Kate Alliott, Clifford Chance partner leading the team that advised Bank of
Scotland, said:
“It was very satisfying and challenging to work on this groundbreaking CGF
project.”
The Clifford Chance team assisting Kate Alliott included Simon Thompson,
Sarah Howells and Paul Deakins and senior associate John Burke assisted by
Emma Shepherd.
