§ Lord Oakeshott of Seagrove Bayasked Her Majesty's Government:
(a) what was the total amount of equity investment by Carillion plc or any of its subsidiaries 185WA in the Darent Valley Hospital private finance initiative; (b) when that investment was made; (c) for how much and when that equity investment was sold; and (d) what drawback or profit share arrangements were in place in respect of that investment; and, if none, why not. [HL318]
§ Lord WarnerIn 1997 Carillion was awarded the contract for the Dartford and Gravesham National Health Service Trust private finance initiative project, now known as the Darent Valley Hospital. They invested £4.1 million in the project company established to carry out the contract. In November 2003 Carillion announced that it had sold its share of the investment in the Darent Valley Hospital PFI scheme for £5.2 million.
In March 2003 the original loan taken out by the project company to finance the contract was replaced by a different loan—this resulted in a refinancing gain shared between the project company and the NHS trust. The NHS trust share of the benefits from this refinancing amounted to nearly £12 million.
The sale of the equity investment will allow Carillion to crystallise the refinancing gain associated with their investment, which amounted to £11.2 million.
While it is entirely right that the NHS trust should share in the refinancing gain, we would not expect it to benefit from the sale of equity in a project company by one private sector organisation to another.
The recycling of equity is important to fund investment in future health PFI projects.