48DW Rmpa 5.337%

TIDM48DW

RNS Number : 7141H

RMPA Services PLC

02 December 2015

RMPA Services PLC ("RMPA") Communications Brief Update

Standard & Poor's (S&P) Credit Rating Downgrade to BB+

Overview

RMPA issued a Communications Brief on 10 August 2015 as a response to the S&P credit rating downgrade dated 28 July 2015.

The RMPA project to provide serviced accommodation to the MOD at Colchester Garrison continues to perform very well. The project was completed ahead of schedule, has experienced very low levels of financial penalties, and has returned substantial sums to the MOD by way of savings. Relations with the MOD and the RMPA contractual counterparties remain excellent and RMPA has recently introduced revised catering and mess facilities in accordance with MOD needs.

There was a significant change in shareholding during FY 2014/15 which resulted in the majority of shares being acquired by Allianz and funds managed by Dalmore Capital. The new shareholders are both long-term investors in infrastructure on behalf of life assurance and pension policyholders, and are focused on generating stable and sustainable returns in co-operation with all of RMPA's stakeholders.

Update

As detailed in the Communications Brief, RMPA and its shareholders are working towards seeking a reinstatement of its investment grade from S&P and are currently engaged in various work streams to produce a comprehensive package of supporting evidence to present to S&P. The key elements of this work are as follows:

-- The development of a new financial model providing additional functionality and reporting outputs which will demonstrate the financial robustness of RMPA. This model is now complete and has been audited by an independent party. The Senior Creditor has been approached to approve the new model and its associated assumptions including those assumptions related to the surrender of tax allowances. This new model will form part of the pack of evidence to S&P.

-- A comprehensive review of the lifecycle plan and associated costings. This review is underway and is expected to be completed in the second quarter of 2016. The Senior Creditor's technical adviser will be required to confirm that the updated lifecycle budget which will be incorporated into the financial model is appropriate and adequate.

   --     Adoption of FRS 102 accounting treatment and revised tax allowance assumptions. 

Given the inter-relationship of the work streams being undertaken, RMPA and its shareholders have decided not to instigate the Event Driven Review until all of these activities are complete.

RMPA can confirm that the GBP13.7m Tax Receipt, which S&P assumed would be distributed in September 2015, has been retained in the Project. It is the intention of the shareholders that it will be retained until September 2016 when the work streams above are complete and that it would only be released in line with contractual requirements and in a way that does not impair the financial strength of RMPA.

The Project continues to perform well and to exceed forecasts, demonstrated by a Debt Service Cover Ratio of 1.27 and a Loan Life Cover Ratio of 1.44 for September 2015 compared to forecasts of 1.21 and 1.32 respectively.

RMPA and its shareholders are confident that the updated comprehensive information package will demonstrate the long term financial stability of the Project and will be sufficient for S&P to reinstate an investment grade rating for the Project.

In October 2015, Moody's credit rating agency concluded its review of RMPA and maintained its rating at A2.

This information is provided by RNS

The company news service from the London Stock Exchange

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December 02, 2015 05:37 ET (10:37 GMT)

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