DBRS Comments on Hospital Infrastructure Partners (NOH) Partnership

DBRS Limited (DBRS) released the following comments on recent developments in the Hospital Infrastructure Partners (NOH) Partnership (ProjectCo) project (the Project). On January 15, 2018, Carillion plc, one of the guarantors of the service provider’s service obligations concerning the Project, went into compulsory liquidation with immediate effect. The other guarantor under the service contract is EllisDon Inc., which remains jointly and severally liable as a guarantee provider.

Pursuant to the Common Terms and Intercreditor Agreement (CTIA), the compulsory liquidation of Carillion plc is an insolvency event of a service guarantor, which is an event of default. Notwithstanding, the CTIA indicates that such event of default shall not occur to the extent that the remaining service guarantor provides satisfactory evidence to the lenders and bondholders that it is financially and technically able to fulfil all of the obligations under the parent company guarantee. EllisDon Inc. has indicated that it intends to provide such evidence. Lenders and bondholders will have up to 60 days to approve, by way of Extraordinary Resolution, the acceptance of the evidence to be provided by EllisDon Inc. Consequently, no negative rating effects are currently anticipated by DBRS as a result of this issue.

The compulsory liquidation of Carillion plc is not an event of default under the Project Agreement and does not give rise to any rights by Halton Health Services to terminate the Project Agreement. ProjectCo has indicated that in accordance with its responsibilities under the Project Agreement, operations at the hospital will continue while this issue is resolved. As a result, the current events are not anticipated to have any implications for bondholder payments.

DBRS is monitoring the situation and will provide updates as necessary.

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

The principal methodology is Rating Public-Private Partnerships, which can be found on dbrs.com under Methodologies.

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