Innovative Funding Solutions

During the course of its project bid activity, Robertson Capital Projects has developed a number of highly innovative and bespoke funding solutions. These have been developed in response to the ongoing need to drive optimum value from project finance arrangements and deliver cost effective bids within client affordability levels. Recent projects which demonstrate this are highlighted below.

Dundee Schools PPP

During the development of the project, Robertson Capital Projects undertook a detailed funding competition to secure best value senior debt project finance. This involved 4 major banks with a track record in successfully providing funds for PPP participants, with Dexia Public Finance Bank ultimately proving successful. Whilst the funding competition was undertaken to secure the most competitive source of debt, each funder was also required to confirm its position on key commercial terms in the standard form PPP contract. This ensured that any subsequent appointment secured best value on both cost and commercial issues.

Given the relatively large scale of the project, Robertson Capital Projects also progressed an alternative monoline bond finance option, with the same drive towards best value on both cost and commercial grounds.

Both the senior debt and bond funded options were submitted as part of the final bid proposals, with Robertson Capital Projects subsequently securing Preferred Bidder status on the basis of its bond finance option.

As part of the Preferred Bidder process, Robertson Capital Projects agreed to run both the bond and senior debt options during the period up to financial close to avoid any risk on financial deliverability should the bond fail to secure an investment grade financial rating.

In line with the financial close timetable, Robertson Capital Projects undertook a series of presentations to both Standard & Poors and Moody's, which resulted in an investment grade rating being received. Royal Bank of Canada subsequently arranged the £100M million bond which was underwritten by Ambac Assurance.

This was the first PPP bond in the UK involving three separate design and build contractors contracting directly with an SPV.

Forfar/Carnoustie Schools PPP

During the development of the project, Robertson Capital Projects undertook a detailed funding competition to secure best value senior debt project finance. This involved 3 major banks with a track record in successfully providing funds using PPP forms of procurement, with Dublin based Depfa Bank ultimately proving successful.

Whilst the funding competition was undertaken to secure the most competitive source of debt, each potential funder was also required to confirm its position on key commercial terms in the standard form PPP contract. This ensured that any subsequent appointment secured best value on both cost and commercial issues.

The Council has been able to take advantage of preferential senior debt terms on this project by working with Robertson Capital Projects and Depfa Bank to have the project rated by a credit agency similar to the process which would be expected under bond financed projects. The Senior Funder's term sheet for providing the project finance identified an option which would give the Council a discount on the margin over the standard swap rate, provided the project achieved a BBB- credit rating. This discount was estimated to deliver a unitary charge saving in excess of £50K per annum for the Council.

As part of the bidding process, Depfa Bank appointed an internal team of advisers, covering legal, insurance and technical issues and was asked to provide a full legal commentary on the Scottish Schools Standard Contract (SSSC), which was incorporated into a full commercial mark up of the SSSC at bid stage. This provided the client with a clear and accurate consortium position on all major commercial issues requiring further negotiation.

In addition to providing letters of support for the bid and a detailed term sheet, Depfa Bank also provided a copy of its initial due diligence report as commissioned from its technical adviser. This provided comfort on the financial robustness of the construction, FM and lifecycle allowances, as well as a preliminary analysis on the payment mechanism.