Credit crunch and projects: the providers' view

1
Credit crunch and projects the providers' view

• Philip Vernon
• Partner Energy, Transport and Infrastructure
  Department
• Ashurst LLP, London
• philip.vernon_at_ashurst.com

2
Introduction

• basis of procurement
• project structure
• credit crunch scenarios
• questions for panel

3
Basis of procurement

• procurement by central government/local authority
• public works/services contract
• subject to EU procurement regulations
• now normally competitive dialogue procedure
• legacy deals using negotiated procedure

4
Project structure spider diagram

• Different sectors e.g.
• waste
• schools
• hospitals
• prisons
• transport

Procuring Authority
EquityInvestor
Project Co
Funders
EquityInvestor
Services Contractor
BuildingContractor
5
Project structure common ownership
Procuring Authority
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
6
Credit crunch scenarios

• examples of scenarios
• non availability of finance
• change in finance terms/requirements
• change in consortium member
• timing within procurement
• pre close of dialogue
• post close of dialogue

7
Non-availability of financeauthority funding
Procuring Authority
Loan/Capital Contribution
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
8
Change in finance terms/requirementschange to
finance terms
Procuring Authority
Increased unitary charge
EquityInvestor
ParentCompany
Increased funding costs
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
9
Change in finance terms/requirementschange to
project agreement terms
Procuring Authority
Increased risk/ unitary charge
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
10
Change in finance terms/requirementschange to
supply chain terms
Procuring Authority
Increased unitary charge
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
11
Change in finance terms/requirementschange to
equity terms
Procuring Authority
Increased unitary charge
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
12
Change in consortium memberchange to equity
investor
Procuring Authority
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
13
Change in consortium memberchange to supply
chain
Procuring Authority
EquityInvestor
ParentCompany
Project Co
Funders
EquityInvestor
ParentCompany
Services Contractor
BuildingContractor
14
Panel discussion
Scenarios
Non-availability of finance
- authority funding
Change to finance terms/requirements
- finance terms
- change to project agreement terms
- change to supply chain terms
- change to equity terms
Change to consortium member
- change to equity investor
- change to supply chain
Questions
Effect on prequalification?
Depends on basis of procurement?
- negotiated procedure
- competitive dialogue
Depends on timing within procedure?
- pre close of dialogue
- post close of dialogue
Credit crunch market wide issue?
Mitigants for new procurements?
State aid?
15
Credit crunch and projects the providers' view

• Philip Vernon
• Partner Energy, Transport and Infrastructure
  Department
• Ashurst LLP, London
• philip.vernon_at_ashurst.com

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