DBRS Places Hospital Infrastructure Partners (NOH) Partnership Under Review with Negative Implications

DBRS Limited (DBRS) has today placed the ratings of Hospital Infrastructure Partners (NOH) Partnership (ProjectCo) Under Review with Negative Implications. The rating action reflects a notification received on May 20 from ProjectCo that an event of default had occurred under the Common Terms and Intercreditor Agreement. The event of default was triggered by a default of the service provider (a joint venture of Carillion Canada Inc. and EllisDon) under the service contract due to flooding and performance issues related to doors as well as heating and ventilation systems. DBRS was only informed of the situation in the afternoon of May 20, although ProjectCo appears to have been aware of the situation since the hospital issued the monitoring notice under the Project Agreement on April 13, 2016, at which point a significant amount of deductions and failure points had accumulated. DBRS also understands that ProjectCo is investigating potential mitigants and is currently in discussions with the hospital regarding the potential implications under the Project Agreement.

DBRS is still waiting for further details, which are expected this week, but considers this turn of events to be surprising given the short period that has elapsed since substantial completion (July 2015), the calibre of the service providers (Carillion and EllisDon) and the relatively low complexity of the service requirements.

DBRS will continue to monitor the situation closely as new details become available and warns that a negative rating action may follow shortly.

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.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.