PFI - UK MoD presses on with next PFI

* Metrix team closing on agreement with MoD

* £1.4bn loan to be launched shortly

* Capital markets an option

* MoD digesting critical NAO report into previous PFI mega deal - FSTA

Defense News: LONDON (Project Finance International) - The Metrix consortium planning the Defence Training Review (DTR) project being procured under the private finance initiative (PFI) is set approach potential pathfinder banks shortly for a £1.4bn long term loan financing. Metrix - made up of QinetiQ (QQ.L), Sodexo (EXHO.PA), Raytheon (RTN.N) and EDS - won the deal back in 2007 and has been negotiating the scope of the project and its increasing costs ever since. The loan will finance construction of the extensive new accommodation facilities at St Anthan in south Wales. The risk on the training performance aspect of the scheme will be taken by Metrix directly. Given the size of the financing, the use of bond finance will be examined too. The selected pathfinders will work with Metrix on finalising the financing package.

DTR will centralise the Armed Forces training programme with around 20,000 students visiting the St Anthan site ever year. It will be one of the largest single construction projects in Wales. Under the MoD timetable, a final investment decision on the scheme will be taken in the summer. A £29m early works construction contract has already been let and it is hoped the entire deal can sign in November.

This week the National Audit Office (NAO) issued a critical report on the MoD's Future Strategic Tanker Aircraft (FSTA) PFI deal which was financed via a £2bn loan in early 2008. The NAO said it could not conclude the deal represented value for money as other procurement options were not fully explored. However it added the department did well to close the financing of the scheme in difficult market conditions. EADS is the lead sponsor on the FSTA scheme.

rod.morrison@thomsonreuters.com - www.pfie.com