Confirmation of Events of Default

Coventry & Rugby Hospital Co PLC

09 September 2025

 

SCHEDULE 1

FORM OF NOTIFICATION TO THE BONDHOLDERS

THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF BONDHOLDERS. IF BONDHOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD TAKE, THEY SHOULD IMMEDIATELY CONSULT THEIR OWN INDEPENDENT PROFESSIONAL ADVISERS.

THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO THE REGISTERED AND BENEFICIAL OWNERS OF THE BONDS. IF APPLICABLE, ALL DEPOSITORIES, CUSTODIANS AND OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUIRED TO EXPEDITE TRANSMISSION HEREOF TO BENEFICIAL OWNERS OF THE BONDS IN A TIMELY MANNER. IF BONDHOLDERS OR BENEFICIAL OWNERS OF THE BONDS ARE IN ANY DOUBT AS TO THE MATTERS REFERRED TO IN THIS NOTICE, THEY SHOULD CONSULT THEIR STOCKBROKER, LAWYER, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER WITHOUT DELAY.

If you have recently sold or otherwise transferred your entire holding(s) of Bonds referred to below, you should immediately forward this Notice to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

THE COVENTRY AND RUGBY HOSPITAL COMPANY PLC (the "Issuer")

£407,239,000

3.246 per cent. Index Linked guaranteed secured bonds due 30 June 2040

                                (including £35,000,000 variation bonds)

(with authority to issue further bonds)

unconditionally and irrevocably guaranteed as to scheduled payments of principal and interest pursuant to a financial guarantee policy

issued by MBIA ASSURANCE S.A. (succeeded by ASSURED GUARANTY (UK) LTD)

(the "Bonds")

(ISIN: XSO159152189 Common Code: 015915218)

The Company has provided the Bond Trustee and Credit Provider with confirmation of a number of Events of Default and a potential breach of representation in relation to the nature of the audit opinion on the 2024 Financial Statements.

Confirmation of Events of Default

In accordance with the Collateral Deed the Issuer has notified the Bond Trustee, Security Trustee and Credit Provider of a number of Events of Default, some of which have been waived, albeit on a revocable basis:

Project Agreement and Service Failure Points

The Coventry and Warwickshire Partnership Trust ("CWPT") has issued the following notices to the Security Trustee, each setting out the terms by which CWPT would be entitled to terminate the Project Agreement pursuant to Clause 44.4(c) of the Project Agreement:

(a)     notice from CWPT to the Security Trustee dated 21 June 2022, re: Termination Notice under Clause

3.2 of the Funders Direct Agreement;

(b)     a second notice from CWPT to the Security Trustee dated 21 June 2022, re: Termination Notice under Clause 3.2 of the Funders Direct Agreement;

(c)     a notice from CWPT to the Security Trustee dated 5 August 2022, re: Termination Notice under Clause 3.2 of the Funders Direct Agreement; and

(d)     a second notice from CWPT to the Security Trustee dated 5 August 2022, re: Termination Notice under Clause 3.2 of the Funders Direct Agreement,

together, the "Notices".

There is an existing ProjectCo Event of Default under clause 44.1(i) of the Project Agreement as the Issuer has been awarded more than 70,000 Service Failure Points in a 6-month period by the University Hospital Coventry and Warwickshire Trust and over 22,000 Service Failure Points in a 6 month period by CWPT (the "SFP Event of Default").

As a consequence of the events constituting the SFP Event of Default and the Notices in respect of the Trusts' Termination Right, Events of Default have occurred under Clauses 15.16 and 15.25 of the Collateral Deed. 

This in turn led to administrators being appointed in respect of the holding company, The Coventry and Rugby Hospital (Holdings) Limited ("Holdco") (the "Administrator Appointment"), as further detailed under the Administrators Instruction Letter.

Winding-up

As a consequence of the Administrator Appointment, HoldCo being a Material Project Party, an Event of Default has occurred under Clause 15.5 of the Collateral Deed.

Reserve Accounts

There are shortfalls in the reserve accounts and under clauses 15.17 (Senior Debt Service Reserve Account), clause 15.18 (Change of Law Reserve Account) and clause 15.19 (Shortfall in Life Cycle Reserve Accounts or Operating Account) of the Collateral Deed, Events of Default shall occur if the relevant reserve accounts are not maintained ("Reserves EODs").  

A waiver has been granted by AG (in its capacity as Credit Provider) to the Issuer under a letter agreement (the "Reserve Account Balance Waiver Letter") in respect of the Reserves EODs.  However, that waiver is revocable at any time by notice.  So, if AG revoked the Reserves EODs waivers described in the Reserve Account Balance Waiver Letter, there would be an Event of Default under clauses 15.17, 15.18 and 15.19 of the Collateral Deed (provided that, in respect of clause 15.19 (Shortfall in Life Cycle Reserve Accounts or Operating Account) of the Collateral Deed only, that set of circumstances has existed for two consecutive Scheduled Payment Dates.

Debt Ratios

An Event of Default is continuing pursuant to Clause 15.20 (Debt Ratios) of the Collateral Deed. At December 2024 the Annual Senior Debt Service Cover Ratio was, and also from that date onwards the Annual Senior Debt Service Cover Ratio is anticipated to be, less than 1.05:1. At December 2024 the LLCR was, and until the end of the Project the LLCR is projected to be, less than 1.05:1

Financial statements audit opinion

BDO LLP ("BDO") audited the 31 December 2024 financial statements. BDO provided a disclaimer of audit opinion.  Specifically, BDO stated that: "We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements." This could constitute a breach of the representation in Clause 3.18 (No Material Adverse Change) of the Collateral Deed in that it could signal a: "material adverse change in its business, assets, financial condition, or property since the latest Financial Statements delivered pursuant to this Deed which will affect the Issuer's ability to perform its material obligations under the Senior Finance Documents".

Enquiries

The Issuer

The Coventry and Rugby Hospital Company Plc 8 White Oak Square

Swanley Kent

BR8 7AG

Attention: Jacques Mostert ([e-mail])

Important information

This announcement is not a prospectus, is distributed for information purposes only and does not constitute or form part of any offer or invitation to issue, acquire or dispose of any securities in any jurisdiction. Nothing in this document is intended to amount to an invitation or inducement to engage in investment activity. Nothing in this document amounts to the giving of advice. If you are in any doubt as to the action you should take, you should consult a professional adviser.

 

END