DBRS Confirms PH Hamilton LP Long Term Senior Bonds at “A”, Stable; Disc. Short Term Senior Bonds

DBRS has confirmed the rating of “A” with a Stable trend assigned to the $255 million Long Term Senior Bonds of Plenary Health Hamilton LP (ProjectCo), and is discontinuing the rating on the $115 million Short Term Senior Bonds which were redeemed on December 13, 2013, with the proceeds from the substantial completion payment. 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 with St. Joseph’s Healthcare Hamilton (SJHH or the Hospital).

The project successfully achieved substantial completion on the target date of December 6, 2013. A final completion date of October 2014 is currently under consideration by ProjectCo and SJHH. The remaining work required to reach final completion primarily includes the demolition of the existing hospital, the preservation and restoration of heritage elements that were added to the scope of work through a variation, the completion of the parking lot, landscaping and the completion of a soccer and baseball field. It is expected that minor deficiencies inside the facility will be rectified by the end of January 2014, and the Hospital is scheduled to begin transitioning patients into the facility on February 9, 2014.

The achievement of substantial completion in 2013 marked the beginning of the 30-year service phase, during which Honeywell Limited (the Service Provider) performs all facilities management (FM) services, as well as lifecycle services, on behalf of ProjectCo in order to return the facility in a state of good repair upon expiry of the PA. The 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, which includes a letter of credit in an amount equal to one-half of the annual FM plus average lifecycle (indexed), will afford a modest cushion against unforeseen events during the service phase.

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.

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.