Tear Sheet: St. James's Oncology Financing PLC

Ratings On 16 U.K.-Based Hospital Projects Affirmed Under Revised Project Finance Methodology, Feb. 2, 2023 St. James?s Oncology Financing PLC, March 31, 2022 In March 2017, U.K.-based special purpose entity St. James's Oncology Financing PLC issued £173.15 million of notes, £57.0 million of fixed-rate bonds, and £38.0 million of index-linked bonds, all due March 2037. The issuer on-lent the proceeds to St. James's Oncology SPC Ltd. (SJO; ProjectCo) to refinance long-term senior debt issued in 2004 to finance, construct, and operate a 350-bed oncology wing (the Bexley Wing) for St. James's University Hospital in Leeds. ProjectCo operates under a 33-year project agreement (PA) with Leeds Teaching Hospitals NHS Trust (the trust), which expires in December 2037. Lendlease Construction (EMEA) Ltd.

...St. James's Oncology Financing PLC (ProjectCo, or SJO) won the litigation process against Lendlease Construction (EMEA) Ltd. (Lendlease) related to latent construction defects. The Defects Limitation Period surveys conducted in 2019 identified certain construction defects at the project site. The contractor Lendlease denied responsibility for rectification of these defects, which led to a litigation process between the parties. The original claim for the defects was ú5.4 million. As a result of the litigation, Lendlease paid ú5.05 million in damages and ú2.25 million as a compensation in costs in fourth-quarter 2022. This is a positive development for ProjectCo as it provides financial stability to the cash flow for defects rectification works. Consequently, it also reduces the risk of adverse contractual actions from the Leeds Teaching Hospitals NHS Trust (the Trust) for potential asset quality deterioration. We expect liquidity to be sufficient to cover defects remediation cost within...

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