The £5bn upgrade of the M25 looks to be back on track with lending backs meeting this morning to set a date for financial close.
According to NCE sister title Infrastructure Journalthe bank group on the deal meet this morning [Wednesday] to hear the news that the date of financial close has been “set in stone”.
IJ understands that the banks have been drawn together to discuss the final process that will be required to reach financial close on Wednesday 20 May.
“While the financial adviser HSBC had been pushing to hit financial close at the end of April, slippages like these are far from unusual in this sector – and par for the course in this financing climate,” said IJ editor Angus Melville.
“That this transaction has pulled in so many banks in such a tight market stands testament to the quality of this deal, as does the limited involvement of emergency lending from the Department of Transport.”
The extent of government funding to see the deal through has yet to be revealed. Last month the Government admitted that it was “not yet determined” whether the Treasury’s new PFI funding pot would be used to plug the shortfall.
Under questioning from Conservative shadow transport minister Stephen Hammond, transport minister Paul Clark would not reveal current etimates for widening junctions 16 to 23 and junctions 27 to 30 of the M25, saying the information was “commercially sensitive” until the contract is formally awarded to the preferred bidder Connect Plus, on financial close of the PFI.
“As these works are being procured through a Private Finance Initiative (PFI) contract it is planned that they will funded by borrowings from the private sector which are recovered from the Highways Agency out of availability payments over the life of the contract.
“These payments are subject to contractor performance. In light of current financial circumstances the Government may elect to lend to the project if insufficient private sector funds are available, however this is not yet determined,” he said.