Four top UK firms have advised on the government's first completed credit guarantee finance (CGF) scheme, heralding a new era in public finance initiative (PFI) work.
The CGF pilot will see the creation of a £175 million oncology wing at St James's University Hospital in Leeds, built by a consortium owned by Bovis Lend Lease and HBOS, and funded by the government. The unit will be the biggest cancer treatment centre in Europe with 300 beds.
Linklaters advised HM Treasury and the Secretary of State for Health; Clifford Chance advised HBOS; DLA advised the consortium Catalyst; and Dickinson Dees advised the hospital.
Instead of using private funding from the City, as with most PFI schemes, the government has for the first time arranged the debt itself and asked the private sector only to handle the building aspect. HBOS was involved because it will guarantee repayment of the £225 million in debt facilities the government is offering to Catalyst.
Kate Alliott, who led the team for Clifford Chance, said a key factor in the CGF system was that the Treasury, by issuing gilts, can finance the project more cheaply than going to the City. 'The project shows value for money,' she added.
DLA commercial and projects partner Nick Maltby said the deal was 'a tremendous achievement'.
He added: 'This is the first scheme to complete the CGF route, which it did in only two months from the decision to pursue CGF. This deal shows that there is a future for government financing of PFI.'