The Coventry and Rugby Hospital Company (CRHC), which is the project vehicle delivering the PFI contract at the hospital, revealed on 14 November 2022 that it had received the notice from the public partner.
The notice is in relation to various leaks in the plastic hot water pipes, which were repaired within a few days and both parties are now working on a plan to mitigate the possibility of further leaks.
However, ratings agency Moody’s has placed the project’s bond rating on review for downgrade, amid concerns that the public sector partner may choose to withhold the next quarterly availability payment - due in January 2023 - by claiming that the site remains unavailable.
“If UHCW is claiming the entire site is still unavailable (noting that the recent leaks have been rectified) then potentially it may in the worst case apply a 100% payment deduction in January 2023,” Moody’s warned.
If that happens, Moody’s said CRHC, as the private partner, would need to utilise its six-month debt service reserve account to make the 30 June 2023 debt service payment.
The PFI contract has faced numerous challenges in recent times, and earlier this year Coventry and Warwickshire Partnership NHS Trust issued a notice of intent to issue a partial termination, related specifically to the mental health unit delivered under the PFI deal.