DLA has successfully advised the Ministry of Defence (“MOD”) on the complex private finance initiative project for the redevelopment and operation of Colchester Garrison.
The contract with RMPA Services Plc, a consortium comprising Sir Robert McAlpine Limited, WS Atkins Plc, Sodexho Defence Services Limited and HSBC, is worth approximately £2 billion over its 35 year life and will see the complete redevelopment of the existing garrison, parts of which date back to the nineteenth century.
The new garrison will include several new barracks – including living, working, training and recreation accommodation for 3,500 military and 750 civilian staff.
The contract is the first of its type for the MOD in terms of the nature and magnitude of the bond issue and represents an innovative and ground-breaking approach to the development and operation of infrastructure within the MOD. The deal was bond-financed by RMPA Services Plc issuing £680,000,000 (5.337 per cent) Guaranteed Secured Bonds due 2038 (including £100,000,000 of variation bonds) guaranteed by AMBAC.
The deal was further complicated as a result of the disposal of approximately 84 hectares of surplus land to Taylor Woodrow Developments Limited for new residential and commercial accommodation. The disposal is due to take place in phases during the construction period with the sale proceeds contributing to the funding for the new garrison.
As part of this project, DLA also advised the MOD on a Gilt Settlement Programme which was designed to actively manage market disruption at the time of bond launch. This is the first time that a formal programme of market stabilisation has been undertaken by a government department with the aim of improving the value for money being achieved for this important PFI project.
Colin Wilson, partner in DLA’s Infrastructure and Project Finance Group, who led the team advising the MOD said:
“The work was extremely complicated because the MOD was, in effect, doing a PFI project for a small town. Not only did this cause significant planning and real estate issues, but we also had to work closely with RMPA Services Plc, their funders and advisers to ensure that the project was deliverable with competitive financing, despite the significant number of parties involved and the fact that there is almost a five year construction period”.
Key members of DLA’s team included infrastructure and Project Finance solicitors Kathy Sharp and Simon Barrett, Real Estate partner Helen Barraclough, Project Finance partner Sarah Day and Planning associate Chris Bowes.
RMPA Services Plc were advised by Ashurst, AMBAC by Linklaters and Taylor Woodrow Developments Limited by Eversheds.