The design and construction of the new 859 bed acute hospital for Barking Havering and Redbridge Hospitals NHS Trust is being supported by a £100 million loan from the European Investment Bank, the European Union's long-term financing institution. The EIB's contribution is being financed through a back-to-back RPI-linked bond.
When complete at the end of 2006, the new hospital will bring together the services provided at the Harold Wood and Oldchurch hospitals onto a single site, giving the community the best of the facilities to provide the highest standards of care.
EIB Vice-President Peter Sedgwick said: This project will greatly improve the quality and efficiency of acute hospital services in an area with significant health needs. There will be direct benefits to patients as a result of integrating services onto one site and eliminating the need for inter-site patient transfers. Such PPP projects play a key role in the UK government's Private Finance Initiative and make an important contribution to lowering the cost of such strategic investment to the public sector. They also introduce private sector efficiencies and expertise into the construction and maintenance of the project.
The Catalyst Healthcare (Romford) Ltd consortium were selected as the Trust's preferred bidder in February 2002, following which the design of the scheme was developed in partnership with the Trust clinical staff, and contact documentation agreed immediately before Christmas.
The consortium shareholders are Bovis Lend Lease, Sodexho and Halifax Bank of Scotland.
Bovis Lend Lease will design and construct the new hospital and will be responsible for the lifecycle of the structure and major components. Sodexho will provide hard and soft facilities management services including catering, domestic and, together with lifecycle responsibility for internal areas and Siemens will provide the medical equipment and telephony services.
The project will be financed from a combination of 118m senior bonds issued by the Issuer and 100 m loan facility provided by European Investment Bank (both index-linked), together with mezzanine loan provided by HBoS plc (14m), and junior subordinated loanstock and ordinary shares (14m).
Financial Security Assurance (U.K.) Limited will provide an unconditional and irrevocable guarantee on the scheduled payments of principle interest under the Index-Linked Bonds issued by the Issuer.
The European Investment Bank supports EU policy objectives by providing long-term finance for economically viable investments. Healthcare infrastructure is one of the Bank's lending priorities. Projects in this sector are increasingly implemented in a private-public- partnership structure. The EIB is an active participant in the PPP market both in Britain as well as in continental Europe. Since the beginning of the 1990s, EIB has lent EUR 18 bn to PPPs in the education, health and particularly in the transport sector and, thus, acquired a unique Europe-wide experience.