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Carillion closes on £1.7bn Canadian hospital contract

A Carillion joint venture has reached financial close on a Canadian hospital contract worth up to £1.7 billion, the firm announced today.

It follows the news on 8 June that Infrastructure Ontario and Halton Healthcare Services had selected jv Hospital Infrastructure Partners as the preferred bidder to finance, design, build and provide facilities management and life-cycle maintenance services for Oakville Hospital in Ontario. 

The project will be delivered using the Alternative Financing and Procurement (AFP) model, similar to the UK’s public-private partnership (PPP) model. 

The 30-year contract is expected to be worth some £1.3bn at 2011 prices and £1.7 bn after taking into account indexation for anticipated price inflation.

Carillion chief executive John McDonough said: “We are delighted to have achieved financial close on this important new hospital project in less than two months since our appointment as preferred bidder.  Securing this contract further reinforces Carillion’s position as a leader in the PPP market, particularly in the health sector. ”

It is Carillion’s sixth PPP hospital in Canada. The firm will invest about £28m of equity in the project, giving it a 40 per cent equity share in the jv and an expected revenue of £500m over the life of the contract.

The company will also be a member of the jv that carries out the construction work and provide facilities management and life-cycle maintenance services over the 30-year concession period, together expected to generate some £390m of revenue for Carillion at 2011 prices.

Construction will begin this summer and be completed by summer 2015.

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