TAMESIDE HOSPITAL PFI
PROJECT
RNS REGARDING ISSUING OF PRACTICE
STATEMENT LETTER
"Consort Healthcare (Tameside)
plc
Part 26A Restructuring Plan Practice
Statement Letter
London, 24 April 2024 - Consort Healthcare
(Tameside) plc (the "Company"), a project company for the
Private Finance Initiative concession contract (the "Project Agreement") 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 a
proposed restructuring plan under Part 26A of the Companies Act
2006 in respect of the Company (a "Restructuring Plan").
The Company has been in dispute with the Trust
for a number of years regarding issues under the Project
Agreement. That dispute resulted in an adjudication debt of
£8,835,493.96 described in the Company's announcement dated 24
January 2024. Further, the Trust has since asserted that for
the period from 1 January 2022 to 31 October 2023 it is entitled to
deduct from amounts due under the Project Agreement the sum of
£20,315,933.38. The Company believes that the amount the
Trust may be entitled to deduct does not exceed £12,343,870.84 but
in any event this deductions claim is likely to lead to a
significant dispute between the Company and the
Trust.
The Company has for a number of years been
seeking to achieve a commercial settlement with the Trust.
However, at this time the Company does not consider it possible to
achieve a consensual settlement with the Trust on terms capable of
acceptance by both parties. The Company considers that, in
order to avoid an insolvent outcome for the Company and to ensure
the future viability of the project, the only realistic option
currently available to the Company is to seek to implement a
restructuring in respect of the project by way of a Restructuring
Plan.
Accordingly, earlier today the Company issued a
practice statement letter (the "PSL") to creditors of the Company
(which include the Trust) pursuant to the Practice Statement for
Companies: Schemes of Arrangement under Part 26 and Part 26A of the
Companies Act 2006 issued on 26 June 2020. The PSL sets out
the Company's key proposed terms of the restructuring to be
implemented by way of a Restructuring Plan. A summary of
these terms is included in the Schedule to this announcement.
If, as requested by the Company, the court on or about 20 May 2024
orders the convening of the meetings of the creditors for the
purpose of voting on the Restructuring Plan then it is assumed that
the meetings will take place on 12 June 2024 and that any
subsequent sanction hearing at court will take place in late June
2024. An update will be provided once the dates are
known.
If the Restructuring Plan is sanctioned by the
court, then the Project Agreement will be amended and the project
will continue in accordance with the terms provided for in the
Restructuring Plan, unless the Trust exercises its right to
terminate the Project Agreement within 30 days of the Restructuring
Plan becoming effective. If the Restructuring Plan is not
sanctioned by the court, then the directors consider that the
financial position of the Company will be such that the most likely
outcome will be that the Company is placed into
administration.
There can be no assurance that agreement will
be reached amongst the relevant stakeholders with respect to the
Restructuring Plan or that the Restructuring Plan will be
sanctioned by the court. The Company will provide further
updates to the market in due course.
Enquiries
Consort Healthcare (Tameside)
PLC
consorttameside@vercitygroup.com
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.
SCHEDULE
A summary of the terms of the Restructuring
Plan contained in the PSL is included below. The summary is
not comprehensive. A comprehensive set of terms will be
included in an explanatory statement issued during the course of
May 2024 if the court on 20 May 2024 orders the convening of
creditor meetings for the purpose of voting upon the Restructuring
Plan. The Company has requested the convening of three
meetings, being one for each class of creditors: the first for the
Trust; the second for Ambac as financial guarantor and controlling
creditor under the bonds; and the third for the Company's loan
stock subordinated creditors, in each case to enable them to vote
on the Restructuring Plan. The proposal put to the creditors
and the court will contain two options: a "Sustainability Option Restructuring
Plan" and a "Settlement
Option Restructuring Plan". If sanctioned by the
court, only one of those options will become effective.
Under both options:
· The Company shall
pay to the Trust a settlement sum by way of sculpted reduction to
the monthly service payments due to be paid to the Company under
the Project Agreement for the remainder of the project term.
See below for further details.
· The loan stock
issued by the Company to loan stock subordinated creditors shall be
written down and its repayment profile amended.
· Deductions from
the monthly service payments ("Service Failure Deductions") and
service failure points ("Service
Failure Points") levied, accrued or potentially accrued
under the Project Agreement up to the restructuring effective date
shall be settled and discharged.
· The Company shall
agree to carry out rectification works in respect of a number of
works packages, including (1) lift shafts, (2) passive fire
protection, (3) fire doors, (4) smoke detectors, (5) cavity
barriers, (6) render and (7) grounds and gardens, in accordance
with detailed rectification provisions.
· Provisions shall
be included in the Project Agreement in respect of a 'Centre of
Best Practice' survey being undertaken by the Trust.
· The Company's
entitlement to relief from Service Failure Deductions and Service
Failure Points under the Project Agreement during (1) the agreed
rectification works and (2) the rectification of issues identified
in the Trust's 'Centre of Best Practice' survey shall be
clarified.
· The Company's
obligations in respect of the grounds and gardens service under the
Project Agreement shall be amended.
· The monthly
performance reporting process under the Project Agreement shall be
amended.
· A new 'Functional
Area Functional Unit' table shall be incorporated in the Project
Agreement payment mechanism.
· The Company shall
be released from its obligation to reserve for certain risks in
respect of a future change in law and the balance of its existing
change in law reserve account shall be released to the Trust in
exchange for such future risks being retained by the
Trust.
· Waivers including
the temporary relaxation of some financial covenants shall be
agreed by Ambac under the bond finance documents to enable payment
of the settlement sum and the release of the change in law reserve.
The proposals do not involve any changes to the terms and
conditions of the bonds.
· The Trust shall
have a right to terminate the Project Agreement for default within
30 days of the restructuring effective date on the terms of the
Project Agreement without any modification by the Restructuring
Plan.
· Operational
protocols shall be incorporated in respect of (1) Trust works, (2)
access, (3) follow-on works, (4) extensions of time, (5) the
helpdesk service, (6) Trust damage, (7) grounds and gardens, (8)
the schedule of programmed maintenance and (9) timescales, in order
to assist with the effective operation of the project.
· Restriction on
the Company being penalised for early completion of programmed
maintenance work prior to its planned completion date shall be
agreed.
· In addition,
under the Sustainability Option Restructuring Plan:
o The payment
mechanism under the Project Agreement shall be amended
to:
§ provide relief from
Service Failure Deductions and Service Failure Points for up to 12
months (subject to extension) in respect of certain events for
certain categories of failure event under the Project Agreement;
and
§ reduce Service
Failure Deductions in respect of events covered by the 12-months'
relief for certain categories of failure event under the Project
Agreement by a factor of 2 (50%) of current values for a period of
six months following expiry of the 12-months' relief.
o In order to
enable the Company to pay a greater amount to the Trust by way of
reduction to the unitary charge (as referred to above) than under
the Settlement Option Restructuring Plan:
§ the loan stock
holders will subscribe for £1,500,000 in new secured loan stock,
subordinated to the bonds; and
§ a gain share
agreement shall be entered into facilitating the sharing of any
excess cash in the project between the Trust and the loan stock
holders.
· In addition,
under the Settlement Option Restructuring Plan, in the Project
Agreement:
o Provisions
shall be agreed in respect of future condition surveys and
follow-on maintenance works, including relief for the Company from
Service Failure Deductions and Service Failure Points for up to 12
months (subject to extension).
o A cap of 5% on
the amount of the total monthly service payment that the Trust can
withhold from the Company in respect of disputed Service Failure
Deductions shall be implemented, pending final determination under
the dispute resolution procedure."
24 April
2024