The EIB loan will co-finance with the project bond the redevelopment of adults' and childrens' services in Central Manchester and Manchester Children's University Hospitals National Health Service Trust.
The project is being implemented as a PPP project as part of the UK government's Private Finance Initiative. The project's promoter is the Central Manchester and Manchester Children's University Hospitals NHS Trust, a public sector statutory corporation responsible for the delivery of acute health care services to Manchester and the surrounding area. By implementing the project as a PPP project the UK Government expects to reduce the costs of procuring and operating the hospital over its lifetime, as a result of both increased efficiency in building and facilities management and transfer of construction and design risk to the private sector.
The concessionaire is Catalyst Healthcare (Manchester) Limited, a special purpose vehicle owned by Bovis Lend Lease Holdings Limited, HSBC Infrastructure Fund Management Limited and Sodexho Investment Services Limited. The concessionaire will through its sub-contractors provide the building facilities, non-clinical services and maintenance required over the 38-year life of the concession. Bovis Lend Lease will design and construct the new hospital and will be responsible for the lifecycle of the structure and major components through their BLLFM facilities management division. Sodexho will provide hard and soft facilities management services including catering, domestic and portering, together with lifecycle responsibility for internal areas.
The project will be financed from a combination of GBP 218m senior bonds and GBP 175m loan facility provided by European Investment Bank (both index-linked), together with junior subordinated loan stock and ordinary shares. Ambac Assurance UK Limited will provide a guarantee on the scheduled payments of principal and interest under the Index-Linked Bonds and the EIB Loan.
When signing the finance contract, EIB's Vice President Peter Sedgwick said: We are particularly pleased to co-finance this project as it represents a key piece in the network for acute health services in Manchester. It is an integral part of a wider strategy for the city and the centralisation of some specialist services and, therefore, will contribute to improving the health services for the population in the region. We also expect the project to promote economic growth potential of the Manchester-Liverpool region as the new hospital facility will be an important part of the Manchester Biomedical Corridor, an initiative that is expected to deliver important economic benefits.
The EIB's participation in the financing of this project is being financed through a back-to-back index linked bond issue. EIB's terms and conditions result in lower cost and improve the affordability of the project for the public sector.
The project is the fourth PPP project in the UK health sector which is financed by the EIB, after the Dudley Group of Hospitals PPP project, the Blackburn Hospitals PPP and North East London Hospitals PPP Project.