South Tees PFI signed

Mowlem has reached a financial close on the £160 million PFI contract to redevelop South Cleveland Hospital in Middlesbrough for the South Tees Acute Hospitals NHS Trust.

The scheme is the last of the original 14 priority PFI healthcare projects to reach a financial close and, at 1,000 beds, the largest hospital to be created in England under the PFI. The 124,000m2 scheme brings together 55,000m2 of existing buildings with 13,500m2 of refurbishment works and the complete design and build of 55,000m2 of new facilities.

The £126 million design and build construction work will be undertaken by a Mowlem/Crown House joint venture. Mowlem's facilities management arm, Aqumen, will undertake all non-clinical facilities service provision. The facilities management and maintenance is expected to cost £9 million per annum over the 30-year concession period.

Together with Innisfree Partners and Barclays Infrastructure, Mowlem will own Endeavour SCH PLC, the operating company for the project. The £160 million funding has been raised through a combination of equity and subordinated debt from the three shareholders and a £137 million "wrapped" bond lead managed by Barclays Capital.