• New hospital facilities in the Dudley area of the West Midlands, United Kingdom, being financed with a £70 million (1) loan from the European Investment Bank.
  • The EIB's contribution is being financed in an innovative way through the EIB's first back-to-back RPI-linked bond issue with a maturity of 33 years.

The scheme, for the modernisation and concentration of hospital facilities on three sites in the Dudley area, is being implemented under a Public Private Partnership (PPP), between the Dudley Group of Hospitals Trust and the concessionaire Summit Healthcare (Dudley) Ltd. The concessionaire's shareholders are Bank of Scotland, Sir Robert McAlpine Ltd and Building and Property Ltd.

EIB Vice-President Peter Sedgwick said: " Improving the provision of health services and bringing additional investment into the health sector is a key aim of the EIB as the European Union's long-term financing arm. The Dudley hospitals scheme is a priority PPP "flagship" project for the EIB and the UK government.

"The Dudley hospitals PPP is the first health sector project to be financed by the EIB in the UK. It is also the first RPI indexed linked financing with a specific back-to-back bond issue to have been arranged by the Bank. Financing the EIB loan in this way enables the borrower to match debt service costs more closely to the concession's revenues - also linked to changes in the RPI. It is expected to reduce significantly the overall cost of the project to the borrower and the public sector", he said.

"This transaction is another illustration of the development of new innovative EIB funding techniques for the benefit of our clients which has characterised EIB fund raising activities both in the UK as well as other international capital markets," he added. 

The Dudley Hospitals Trust is the fifth largest provider of acute hospital services in the West Midlands, and serves a population of nearly 400 000. Under the scheme, the Russells Hall Hospital site will provide accident and emergency as well as a comprehensive range of general hospital facilities (surgical, medical, women's and children's services, ambulatory facilities, clinical support, theatres and a day surgery unit). Ambulatory care centres will also be located at the Corbett and Guest Hospitals sites. These will provide outpatient, radiology and rehabilitation services, with a day hospital and day care surgery suite at Corbett. 

The Concessionaire is responsible for the implementation of refurbishment and other capital developments at the three sites, as well as the maintenance of the facilities and such non-clinical services as estate management, information and technology services, portering, cleaning, catering, transport, telecommunications, waste management, etc.

All clinical services, such as patient related work of doctors, nurses and therapists, and management of clinical activities remain the responsibility of the Trust.

The European Investment Bank, the European Union's long-term lending institution, finances capital investment furthering EU integration, in particular: regional development, trans-European networks in transport, telecoms and energy; industrial competitiveness and integration; SMEs; environmental protection; and energy security. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the Member States, the EIB raises its funds on capital markets (AAA issuer). In 2000, the EIB lent some EUR 36 billion, of which EUR 3.3 billion (some £ 2.1 billion) in the UK.


(1) 1 EUR = 0.6185 GBP