The £700 million Wakefield waste management private finance initiative is set to reach financial close without requiring intervention from the Treasury.
According to MRWs sister publication Infrastructure Journal, a club of three commercial banks is now understood to have come together to supply the full senior debt package for the 25-year deal (see story).
Support services firm VT Group has been preferred bidder since 2007 for a project which will involve it providing treatment facilities for up to 200,000 tonnes per year of residual waste. Treatment facilities will include an anaerobic digestion and autoclave plant.
Infrastructure Journal claimed that the banks that will take and hold equal shares of the £80m facility are Barclays, Nord LB and SMBC.
Earlier this month, media reports suggested that the project was subject to delays and financial problems and that the deal would require help from the Treasurys lending arm.
A VT Group spokesman said: We are talking to several banks and we are anticipating that funding will ultimately come from that source. Funding will still be an option from the Treasury should we not get funding from the banks. But we fully anticipate that we will get funding from the banks.
A Wakefield City Council spokeswoman said: Wakefield Council and VT Group are continuing negotiations to conclude the deal for the waste PFI project which are likely to be completed during the summer. The council said the current economic climate is having an effect, as it is having on most similar type developments, but the Wakefield project has three private sector funders providing the full amount of senior debt.
Should this position change the council, in conjunction with VT, may elect to discuss alternate funding routes with the Department for Environment, Food and Rural Affairs and subsequently HM Treasury. However, both the council and VT remain confident that the project will be brought to a successful close with the private sector funders.
Barclays and SMBC banks are also involved in the final stages of negotiations to close the similarly-sized Cumbria waste PFI which is expected to be tied up before the Wakefield project, according to IJ.
The main PFI project that has so far benefitted from the Treasurys unit loans has come from the waste sector, with Greater Manchesters deal with Viridor-Lang receiving a £120 million loan to achieve financial close last month (see MRW story).