Aberdeen City Council’s £120 million 3Rs schools project has been saved following a restructuring of funding from troubled Icelandic bank Landsbanki.
The PFI project, which will deliver 10 new schools, became at risk when funder Landsbanki encountered financial difficulties last Autumn and had to be nationalised.
While the restructuring was being negotiated, the council, along with Landsbanki, were able to provide interim funding on a month by month basis to keep construction going.
The Danish contractor Pihl – part of the NYOP consortium that won the contract - also provided support during this transitional phase.
One of the schools has now been completed, with two further secondary schools also scheduled for completion in October.
Aberdeen City Council’s corporate director for resources management Gordon Edwards said: “Refinancing a project of this magnitude was a major exercise given the turbulent global financial markets. The council’s chief negotiation position throughout the discussions was that there would be no increased liability falling on the council and that the bridging finance of £9.6 million would be repaid in full.
“I am very pleased to confirm that these objectives were achieved. The full building programme continued on June 1 and all schools schedule remain on track.”
Law firm Brodies also worked on the deal. Project team head Keith Patterson said: “The threat to the 3Rs project was serious and the task in negotiating and documenting a permanent restructuring was complex and challenging.”
The NYOP consortium, which won the contract, made up of Icelandic property company Nysir, UK facilities management company Operon, and Danish contractor Pihl & Son.