On March 27, 2009, the Niagara Health System project reached financial close. The project is an Alternative Financing and Procurement (AFP) project for the design, build, finance and maintenance (DBFM) aspects of a greenfield 970,000 square foot hospital and cancer centre in St. Catharines, Ontario. Payments to cover construction, building maintenance, lifecycle repair and renewal and project financing will be made on an availability and performance basis, in a total amount of $1.42 billion over 30 years, or a net present value of $759 million. Construction of the new facility is on schedule to begin May 2009 and will be completed by the end of 2012.
The deal is significant as Infrastructure Ontario's first full DBFM hospital project, the largest project completed by Infrastructure Ontario to date, and the first major Canadian AFP/PPP project to source and secure fresh financing since October 2008, when credit availability and terms tightened dramatically.
Following a two stage procurement process, a consortium headed by Plenary Health was named as preferred bidder on August 8, 2008 and reached commercial close on September 24, 2008. Plenary Health's original financing could not be completed after commercial close, so Plenary Health arranged alternative financing from the private sector which, together with contributions from the public sector, was sufficient to achieve financial close.
The long term financing for the Niagara Health System project was arranged by TD Securities Inc., RBC Capital Markets and BMO Capital Markets. Société Générale, TD Bank and Bank of Montreal provided construction financing for the project. Long-term financing is provided by the public bond market.
The lenders (for the construction bank financing and long term bond financing) were represented by Brian Kelsall, Ella Plotkin, John Sabetti and Marc Lefler of Fasken Martineau.