Doubts over Balfour's funding for £5bn M25 PFI

Balfour Beatty is struggling to raise funding for the £5bn privately financed M25 widening scheme and the £147m Carlisle Northern Development Route PFI scheme.

Preferred bidder ConnectPlus, a Balfour Beatty-led consortium, confirmed its funding competition on the M25 scheme is taking longer than expected, with financial close now delayed to January 2009.

Sources said the deal has been delayed by market conditions, with fewer funders willing to stump up large loans.

A Balfour Beatty spokeswoman said: “We are going through the normal bidding process and are working towards a contract award in the near future. It is not unusual for complex PFI deals to take a little bit longer to reach financial close.”

Meanwhile, funding for the £147m Carlisle Northern Development Route is under question. Carlisle Council awarded the scheme to Balfour Beatty consortium ConnectCNDR last week.

But the firm’s troubled backer, the Franco-Belgian Dexia bank, had to be saved from collapse last week by a £5bn loan from the French, Belgian and Luxembourg governments.

A council spokesman said: “We are not as sure as we were six months ago what those funding arrangements are. We are talking to Balfour Beatty on a daily basis and will wait to see how the situation develops.”

A Balfour Beatty spokeswoman said: “Connect is working closely with Cumbria County Council through the financial bid process and is working towards a contract award early in the new year.”