DBRS Confirms Plenary Health Bridgepoint LP at “A”

DBRS has today confirmed its rating of “A”, with a Stable trend, on the Senior Amortizing Bonds (Series A) of Plenary Health Bridgepoint LP (ProjectCo), the special-purpose entity created to design, build, finance and maintain a new 472-bed hospital and refurbish the adjacent old Don Jail for administrative purposes under a 33.6-year Project Agreement (PA) with Bridgepoint Hospital (BH or the Hospital), one of Ontario’s largest complex care institutions.

Construction began in August 2009 and remains on schedule, with approximately 50% of the project completed (as measured by fees earned by the DB Contractor). Work has advanced smoothly, with no material scope changes and no major concerns raised by BH or BTY Group (the technical advisor, or TA). Currently, the design work is nearly finalized and progress to complete the hospital structure is well advanced. Suspended and vertical slab work has been completed throughout most levels and the remaining slab and formwork is underway on levels nine and ten. Building envelope, curtain wall installation and roughing-in are all underway to varying degrees throughout the lower floors. The building structure is on course to be completed by the end of October 2011, and watertight enclosure is anticipated for April 2012, which the TA believes to be feasible. As of September 2011, selective demolition of the old Don Jail was nearly complete, concrete slab work was complete from levels one to four, and drywall installation and mechanical and electrical work on the lower floors was advancing.

The March 3, 2013, target substantial completion date is unchanged. The TA has certified that PCL has completed a total of $190 million of construction work for the period ending August 31, 2011. The project is tracking closely to the original budget, with the total cost still expected to be $379 million, with a small net adjustment related to variation confirmations. The variations will be funded by the Hospital and will be absorbed into the current construction schedule.

The completion of construction in 2013 will mark the beginning of the 30-year service phase, during which Johnson Controls LP will perform all facilities management services, including lifecycle, on behalf of ProjectCo in order to return the facility in a state of good repair upon expiry of the PA. Financial projections for the service phase remain consistent with the financial model and adequate for the rating. A six-month debt service reserve and the performance security provided by the Service Provider will afford a modest cushion against unforeseen events during the service phase.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Public-Private Partnerships, which can be found on our website under Methodologies.