Balfour Beatty reaches financial close for £163 million Knowsley building schools for the future PPP project

17 December 2007

Balfour Beatty, the international engineering, construction and services group, announces today that its specialist education PPP concession company, Transform Schools, has reached financial close for the £163 million Knowsley Metropolitan Borough Council PPP concession to construct seven new learning centres under the Building Schools for the Future (BSF) programme.

The concession, which is for 25 years, will provide seven state-of-the-art learning centres which will replace all of the Borough’s existing secondary schools over a three-year period.

Transform Schools will work with Knowsley Council not only in the building and management of the new premises, but also in the further development of a clear educational vision through researching and evaluating progressive learning environments and teaching models in the UK and internationally. Together, Balfour Beatty and the Council are investigating the potential for the establishment of a not-for-profit company to manage the extended use of the facilities and an employment and training hub to maximise local employment, training and development opportunities.

Commenting today, Balfour Beatty Chief Executive, Ian Tyler, said:

“We are delighted to have reached financial close on this exciting project which will transform education provision in Knowsley. We bring the experience gained not only from our work on five other major schools PFI schemes but also lessons learned from personalised project-based learning schemes in the UK, US, Australia and Asia.”

Councillor Graham Wright, Knowsley’s Cabinet Member for Children’s Services, said:

“We are delighted to set the seal on this contract and look forward to working with the company as we progress our plans to transform education in Knowsley. Our proposals are genuinely ground-breaking and will combine up-to-date facilities and the latest technology with a modern curriculum and teaching methods.”

Construction and building services work under the contract will be carried out by Balfour Beatty Construction and Balfour Kilpatrick. The maintenance of the schools will be undertaken by Haden Building Management, also a subsidiary of Balfour Beatty.

Balfour Beatty will invest £15.3 million of equity in the project which will bring its overall equity commitment to the education sector to almost £50 million.

Knowsley is the sixth major Balfour Beatty schools PFI project to reach financial close and its first as a concession company under the BSF scheme. Its projects at Stoke and Rotherham are in their seventh and fifth year of operation respectively. Projects in North Lanarkshire and Bassetlaw began in the summer of 2005 and its Birmingham PP2 concession became operational in April 2006. Balfour Beatty is currently preferred bidder for the BSF scheme in Islington, north London.

Last month, Gammon Capital, the Group’s PPP vehicle in South East Asia, was appointed preferred bidder for the £90 million Institute of Technical Education in Singapore.


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Notes to Editors:

  1. Balfour Beatty’s other schools PFI projects are:

    • for Stoke City Council (13 new schools and numerous new extensions in a 25-year concession worth £153 million)

    • for the Metropolitan Borough of Rotherham (10 new schools and five refurbished schools plus energy management, repairs and maintenance, caretaking, cleaning and catering in a 30-year concession worth £100 million in construction and £40 million in long-term services)

    • for North Lanarkshire Council (24 new schools in a 30-year concession worth £140 million in construction and up to £100 million in long term services)

    • for Nottinghamshire County Council (Bassetlaw Grouped Schools - five new secondary schools, a new special school and two new centres for post-16 education in a 25-year concession worth £123 million in construction and in excess of £100 million in long-term services)

    • for Birmingham City Council (12 new and refurbished schools, including two secondary schools, nine primary schools and one early years centre - £56 million of construction work, £40 million in long-term services)

    • For Islington Council, the £140 million BSF scheme to deliver nine secondary schools and two pupil referral units in a 25-year concession.

  2. Transform Schools won both Best Operational Education Project and the overall top prize of Best Operational Partnership (All Sectors) at the 2004 Public Private Finance Awards for its 25-year Stoke Schools concession. In May 2006 its Rotherham project won Best Operational Educational Project under the same award scheme.

  3. Balfour Beatty is undertaking all design and construction work for schools in East Lothian in a contract worth some £40 million under the PPP concession for that council.

  4. Balfour Beatty is providing all design and build services for Babcock and Brown in its schools PFI projects. Work secured under this arrangement to date exceeds £80 million, including the construction of five new schools in Calderdale, West Yorkshire.

  5. The company is also one of the two framework contractors who are providing construction services to the £160 million BSF scheme for Manchester City Council.

  6. Balfour Beatty is a world-class engineering, construction, services and investment business, well-positioned in infrastructure markets which offer significant long-term growth. We work in partnership with sophisticated customers who value the highest levels of quality, safety and technical expertise. Our skills are applied in appropriate combinations to meet individual customer need. Balfour Beatty’s financial position, with significant net cash and with strong operating cash flows, offers continuing flexibility to add additional capacity and expertise to the business mix and to make appropriate investments in PPP and other long-term growth opportunities.

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