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.

The project successfully achieved Substantial Completion on the target date of March 3, 2013, and the Hospital completed its transition into the facility on April 8, 2013. Final completion, originally scheduled for December 17, 2013, has been postponed to December 2014 following a variation directive indicating that the Ministry of Community Safety and Correctional Services would not be able to vacate the existing Toronto Jail located on the Bridgepoint site as scheduled due to a delay in the opening of the new Toronto South Detention Centre, and thus delaying demolition activities required to achieve final completion. ProjectCo now expects that the Toronto Jail building will be vacated and handed over to them by January 2014 to begin the demolition process. Besides the demolition of the jail, outstanding work required to reach final completion includes the demolition of the existing hospital as well as the rectification of some minor deficiencies. BTY Group is of the opinion that the construction of the Bridgepoint Hospital is on target to achieve final completion by the revised target date.

The achievement of substantial completion on March 3, 2013, marked the beginning of the 30-year service phase, during which Johnson Controls LP (the Service Provider) performs 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. Although a minor amount of deductions have been incurred to date as the parties familiarized themselves with the facility, financial projections for the service phase remain consistent with the financial model and adequate for the rating, and all deductions have been passed down to the Service Provider. 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.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

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