REG - Coventry&Rugby Hos. - Confirmation of Events of Default

Assured GuarantyAnnouncement

09/09/2025 17:45

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RNS Number : 6554Y  Coventry & Rugby Hospital Co PLC  09 September 2025

SCHEDULE 1

FORM OF NOTIFICATION TO THE BONDHOLDERS

 

THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF BONDHOLDERS.
IF BONDHOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD TAKE, THEY SHOULD
IMMEDIATELY CONSULT THEIR OWN INDEPENDENT PROFESSIONAL ADVISERS.

 

THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO THE
REGISTERED AND BENEFICIAL OWNERS OF THE BONDS. IF APPLICABLE, ALL
DEPOSITORIES, CUSTODIANS AND OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE
REQUIRED TO EXPEDITE TRANSMISSION HEREOF TO BENEFICIAL OWNERS OF THE BONDS IN
A TIMELY MANNER. IF BONDHOLDERS OR BENEFICIAL OWNERS OF THE BONDS ARE IN ANY
DOUBT AS TO THE MATTERS REFERRED TO IN THIS NOTICE, THEY SHOULD CONSULT THEIR
STOCKBROKER, LAWYER, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER WITHOUT DELAY.

 

If you have recently sold or otherwise transferred your entire holding(s) of
Bonds referred to below, you should immediately forward this Notice to the
purchaser or transferee or to the stockbroker, bank or other agent through
whom the sale or transfer was effected for transmission to the purchaser or
transferee.

 

THE COVENTRY AND RUGBY HOSPITAL COMPANY PLC (the "Issuer")

£407,239,000

3.246 per cent. Index Linked guaranteed secured bonds due 30 June 2040

                                (including £35,000,000
variation bonds)

(with authority to issue further bonds)

unconditionally and irrevocably guaranteed as to scheduled payments of
principal and interest pursuant to a financial guarantee policy

issued by MBIA ASSURANCE S.A. (succeeded by ASSURED GUARANTY (UK) LTD)

(the "Bonds")

(ISIN: XSO159152189 Common Code: 015915218)

 

The Company has provided the Bond Trustee and Credit Provider with
confirmation of a number of Events of Default and a potential breach of
representation in relation to the nature of the audit opinion on the 2024
Financial Statements.

 

Confirmation of Events of Default

 

In accordance with the Collateral Deed the Issuer has notified the Bond
Trustee, Security Trustee and Credit Provider of a number of Events of
Default, some of which have been waived, albeit on a revocable basis:

Project Agreement and Service Failure Points

 

The Coventry and Warwickshire Partnership Trust ("CWPT") has issued the
following notices to the Security Trustee, each setting out the terms by which
CWPT would be entitled to terminate the Project Agreement pursuant to Clause
44.4(c) of the Project Agreement:

(a)     notice from CWPT to the Security Trustee dated 21 June 2022, re:
Termination Notice under Clause

3.2 of the Funders Direct Agreement;

 

(b)     a second notice from CWPT to the Security Trustee dated 21 June
2022, re: Termination Notice under Clause 3.2 of the Funders Direct Agreement;

(c)     a notice from CWPT to the Security Trustee dated 5 August 2022,
re: Termination Notice under Clause 3.2 of the Funders Direct Agreement; and

(d)     a second notice from CWPT to the Security Trustee dated 5 August
2022, re: Termination Notice under Clause 3.2 of the Funders Direct Agreement,

together, the "Notices".

 

There is an existing ProjectCo Event of Default under clause 44.1(i) of the
Project Agreement as the Issuer has been awarded more than 70,000 Service
Failure Points in a 6-month period by the University Hospital Coventry and
Warwickshire Trust and over 22,000 Service Failure Points in a 6 month period
by CWPT (the "SFP Event of Default").

 

As a consequence of the events constituting the SFP Event of Default and the
Notices in respect of the Trusts' Termination Right, Events of Default have
occurred under Clauses 15.16 and 15.25 of the Collateral Deed.

 

This in turn led to administrators being appointed in respect of the holding
company, The Coventry and Rugby Hospital (Holdings) Limited ("Holdco") (the
"Administrator Appointment"), as further detailed under the Administrators
Instruction Letter.

 

Winding-up

 

As a consequence of the Administrator Appointment, HoldCo being a Material
Project Party, an Event of Default has occurred under Clause 15.5 of the
Collateral Deed.

Reserve Accounts

 

There are shortfalls in the reserve accounts and under clauses 15.17 (Senior
Debt Service Reserve Account), clause 15.18 (Change of Law Reserve Account)
and clause 15.19 (Shortfall in Life Cycle Reserve Accounts or Operating
Account) of the Collateral Deed, Events of Default shall occur if the relevant
reserve accounts are not maintained ("Reserves EODs").

 

A waiver has been granted by AG (in its capacity as Credit Provider) to the
Issuer under a letter agreement (the "Reserve Account Balance Waiver Letter")
in respect of the Reserves EODs.  However, that waiver is revocable at any
time by notice.  So, if AG revoked the Reserves EODs waivers described in the
Reserve Account Balance Waiver Letter, there would be an Event of Default
under clauses 15.17, 15.18 and 15.19 of the Collateral Deed (provided that, in
respect of clause 15.19 (Shortfall in Life Cycle Reserve Accounts or Operating
Account) of the Collateral Deed only, that set of circumstances has existed
for two consecutive Scheduled Payment Dates.

Debt Ratios

 

An Event of Default is continuing pursuant to Clause 15.20 (Debt Ratios) of
the Collateral Deed. At December 2024 the Annual Senior Debt Service Cover
Ratio was, and also from that date onwards the Annual Senior Debt Service
Cover Ratio is anticipated to be, less than 1.05:1. At December 2024 the LLCR
was, and until the end of the Project the LLCR is projected to be, less than
1.05:1

Financial statements audit opinion

 

BDO LLP ("BDO") audited the 31 December 2024 financial statements. BDO
provided a disclaimer of audit opinion.  Specifically, BDO stated that: "We
do not express an opinion on the accompanying financial statements of the
Company. Because of the significance of the matters described in the basis for
disclaimer of opinion section of our report, we have not been able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion
on these financial statements." This could constitute a breach of the
representation in Clause 3.18 (No Material Adverse Change) of the Collateral
Deed in that it could signal a: "material adverse change in its business,
assets, financial condition, or property since the latest Financial Statements
delivered pursuant to this Deed which will affect the Issuer's ability to
perform its material obligations under the Senior Finance Documents".

Enquiries

The Issuer

The Coventry and Rugby Hospital Company Plc 8 White Oak Square

Swanley Kent

BR8 7AG

 

Attention: Jacques Mostert (Jacques.Mostert@vercitygroup.com)

 

Important information

 

This announcement is not a prospectus, is distributed for information purposes
only and does not constitute or form part of any offer or invitation to issue,
acquire or dispose of any securities in any jurisdiction. Nothing in this
document is intended to amount to an invitation or inducement to engage in
investment activity. Nothing in this document amounts to the giving of advice.
If you are in any doubt as to the action you should take, you should consult a
professional adviser.

 

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