DBRS Confirms Plenary Health Hamilton LP at “A”, Stable Trends
InfrastructureDBRS has today confirmed the ratings of “A” with a Stable trend assigned to the $255 million Long Term Senior Bonds (Long Term Bonds) and the $115 million Short Term Senior Bonds (Short Term Bonds) of Plenary Health Hamilton LP (ProjectCo). ProjectCo is the special-purpose entity created to design, build, finance and maintain a new 305-bed mental health facility (the Project) under a 33-year public-private partnership (PPP) with St. Joseph’s Healthcare Hamilton (SJHH or the Hospital).
All of ProjectCo’s construction-related obligations have been passed down to PCL Constructors Canada Inc. (the Construction Contractor). As per the latest Technical Advisor (TA) report dated December 3, 2012, and recent discussions with ProjectCo, construction progress is on target to meet the planned substantial completion date of December 6, 2013. Construction is approximately 79% complete as measured by fees earned by the Construction Contractor relative to the construction contract price and is slightly ahead of the planned schedule. Exterior cladding on the hospital structure is nearly complete and interior finishes are progressing in most areas, with very advanced progress in some inpatient areas. Furthermore, commissioning of some mechanical and electrical (M&E) components has begun ahead of schedule. Contracts have been executed for virtually all of the 85% of construction work planned for performance by subcontractors, with only the tendering of the paving top coat contract remaining. A total of six variations have been received by ProjectCo to date, totalling $504,010 in capital costs, all of which are relatively minor in nature. No material concerns have been raised by the TA, BTY Group, and ProjectCo remains in good standing with major project stakeholders.
The completion of construction in 2013 will mark the beginning of the 30-year service phase. The service phase entails routine maintenance of the facility and electromechanical equipment, as well as management of energy consumption and lifecycle maintenance in order to return the facility to the Hospital upon expiry of the Project Agreement (PA) in a state of good repair. Except for general management and insurance responsibilities, all of ProjectCo’s obligations related to the service phase have been subcontracted to Honeywell Limited (the Service Provider), which has considerable experience with clinical PPP projects and lifecycle maintenance. The financial projections for the service phase remain consistent with the original financial model and adequate for the rating.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.
The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.