REG - Consort Hlth.T'side - Doc re. Adjudication and Actual / Potential EoD

Ambac FinancialAnnouncement

24/01/2024 17:30

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RNS Number : 8142A  Consort Healthcare (Tameside) PLC  24 January 2024

RNS REGARDING ADJUDICATION AND ACTUAL/POTENTIAL EVENTS OF DEFAULT

 

"Consort Healthcare (Tameside) plc

 

Adjudication, Service Failure Deductions and Actual/Potential Events of
Default

 

London, 24 January 2024 - Consort Healthcare (Tameside) plc ("Consort
Healthcare (Tameside)", a project company for the Private Finance Initiative
(PFI) concession contract to design, construct, finance, maintain and manage
the lifecycle costs of new hospital facilities in Tameside for the Tameside
& Glossop Integrated Care NHS Foundation Trust (the "Trust") provides an
update regarding the adjudication referenced in the Company's previous
announcement on 23 October 2023 regarding alleged defects in the Tameside
hospital ("the Adjudication").

 

A final decision in the Adjudication was handed down by the relevant
adjudicator on 19 January 2024. Under the final decision, the quantum awarded
as payable (subject to the Standstill, as defined below)) by Consort
Healthcare (Tameside) in the Adjudication is £8,835,493.96 (the "Adjudication
Quantum"), which relates to the project contract months of September 2020 to
December 2021.

 

Consort Healthcare (Tameside) is still considering the impact on its financial
position of the final decision handed down in the Adjudication and will
further update the market in due course.

 

However, in relation to the financial position of Consort Healthcare
(Tameside), please note that, pursuant to a standstill entered into with the
Trust on 27 May 2022 (the "Standstill"), the Trust is prevented from seeking
to recover the Adjudication Quantum or set off the Adjudication Quantum
against the unitary charge payable under the relevant project agreement prior
to the date falling six weeks after the handing down of the relevant
adjudicator's final decision (with the relevant six week period being the
"Standstill Period").

 

The Trust has accrued but not levied further Service Failure Deductions under
(and as defined in) the relevant project agreement for the period from January
2022 to today's date, which amounts are also subject to a standstill (the
"Further SFDs") but do not form part of the Adjudication Quantum. This
standstill is now due to expire six weeks following the issuance of the final
decision of the relevant adjudicator. It is currently unclear what the
quantum of the Further SFDs is but this could potentially be material.

 

Absent an agreement or arrangement with the Trust as to the treatment and
payment of the Adjudication Quantum and any liability in respect of the
Further SFDs which may be agreed or determined, or forbearance by the Trust of
the Adjudication Quantum or any further liability in respect of the Further
SFDs once agreed or determined, it is possible that the Adjudication Quantum
(and/or the Further SFDs) may have an impact on the ability of Consort
Healthcare (Tameside) to either (i) meet its covenants under the £93,300,000
1.9810 per cent. index-linked guaranteed secured bonds (the "Bonds") it has
issued or (ii) continue to trade.  Consort Healthcare (Tameside) is in
discussion with its stakeholders. Consort Healthcare (Tameside) will update
the market in due course as to whether or not any agreement can be reached
with the Trust.

 

The Further SFDs will need to be agreed or determined under the project
dispute resolution procedure and, if agreed or determined to be material, may
have an impact on the ability of Consort Healthcare (Tameside) to meet its
covenants under the Bonds, depending on implementation by the Trust and any
agreement between Consort Healthcare (Tameside) and the Trust.  Any liability
for such Further SFDs has not yet been agreed or determined but such liability
could potentially be material.

 

Subject to the terms of a bond financial guarantee dated 18 September 2007,
Ambac Assurance UK Limited ("Ambac") has guaranteed the payment with respect
to any scheduled payment date of (a) the sum of scheduled interest payable on
such scheduled payment date and (b) scheduled principal payable on such
scheduled payment date.

 

In connection with the guarantee provided by Ambac, Consort Healthcare
(Tameside) has entered into a collateral deed dated 18 September 2007 (the
"Collateral Deed") with (amongst others) Ambac (in its capacity as the
relevant bond financial guarantor).

 

Pursuant to its obligations under the Collateral Deed, Consort Healthcare
(Tameside) has notified Ambac of (i) an Event of Default (as defined in the
Collateral Deed) in respect of the Debt Ratio financial covenant under the
Collateral Deed and (ii) various Potential Events of Default (as defined in
the Collateral Deed) which may become Events of Default once the Standstill
Period expires.

 

The various Potential Events of Default in question directly or indirectly
relate to (i) the potential consequences of the final decision in the
Adjudication and/or (ii) the potential levying of the Further SFDs.

 

Ambac and Consort Healthcare (Tameside) have commenced discussions with other
material stakeholders in connection with the relevant project.

 

 THIS ANNOUNCEMENT CONTAINS INFORMATION THAT QUALIFIES OR MAY HAVE QUALIFIED
AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (EU NO. 596/2014), AS IT FORMS PART OF THE UNITED KINGDOM DOMESTIC
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED."

 

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