DBRS Confirms CSS (FSCC) Partnership at A (low), Stable
InfrastructureDBRS Limited (DBRS) has today confirmed the rating of A (low) with a Stable trend on the $190.3 million Senior Secured Bonds (the Bonds) of CSS (FSCC) Partnership (ProjectCo). ProjectCo is the special-purpose entity created to design, build, finance and maintain a new 665,000 (circa) square foot Forensics Services and Coroner’s Complex (the Project) under a 32.5-year pub¬lic-private partnership with Ontario Infrastructure and Lands Corporation (OILC, formerly known as Infrastructure Ontario). The achievement of Substantial Completion marked the commencement of the 30-year service phase, entailing rou¬tine maintenance of the facility and its electromechanical equip¬ment, as well as management of energy consumption and life-cycle maintenance in order to return the facility to OILC in a state of good repair upon expiry of the Project Agreement (PA).
Substantial Completion was achieved on February 15, 2013, al¬though OILC subsequently directed ProjectCo to modify some areas within the building to accommodate two new tenants, the Office of the Fire Marshal and Emergency Management Ontario. In 2014, ProjectCo and OILC agreed to amend the PA in order to incorporate the tenant fit-out modifications that are currently underway. In DBRS’s view, there was no ma¬terial change to the overall risk profile of the Project, as while the volume of services to be performed has increased margin¬ally, monthly service payments have been adjusted accordingly, as was the functional area and unit weighting schedule of the payment mechanism.
Carillion Services (FSCC) Inc. (Service Provider) has performed the service phase obligations since Substantial Completion, and ProjectCo reports that aside from one elevator-related incident, there have been no significant payment deductions. The facility is partially occupied and transition of tenants into the facility is ongoing, with all parties expected to be settled in the com¬ing months. The financial projections for the service phase have been modified somewhat by the additional services, although metrics remain adequate for the rating. Project resiliencies re¬main at levels that are supportive of the rating, with operating and maintenance and lifecycle breakeven points at 46.7% and 45.2%, respectively. Furthermore, minimum/equity lock-up debt service coverage ratio projections of 1.25 times/1.15 times are maintained. A six-month debt service reserve and the performance security provided by the Service Provider will af¬ford a modest cushion against unforeseen events during the ser¬vice phase. As of July 31, 2014, the outstanding balance of the amortizing bonds is $188.1 million.
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.
The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.
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