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Special Purpose Vehicles

Volume 412: debated on Friday 11 April 2003

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To ask the Chancellor of the Exchequer pursuant to his answer of 5 February 2003, Official Report, column 302W, on the private finance initiative, what assessment he has made of the debt held by PFI stakeholders in special purpose vehicles; and if he will make a statement. [101193]

Banks and other financial institutions generally lend money to PFI special purpose companies in the form of limited-recourse debt, financed by project cash-flows. This money is at risk if the agreed PFI service is not provided.Investors who hold equity stakes in Special Purpose Vehicles typically do not have an obligation to repay debt. Their equity in PFI companies is, however, at risk if the agreed PFI service is not provided.PFI builders and facilities managers working under contract with PFI special purpose companies will also not generally be responsible for repaying the debt issued by PFI special purpose companies. However, the terms of their contracts will often put their payments at risk if their works are not delivered satisfactorily, to time, and to budget.