The government is seeking assurances from the consortium selected to build the Thornton Hall super-prison that it will be able to finance the €400 million project.
Amid growing concerns about the future of the landmark project, the state has sent a letter seeking ‘‘full and frank’’ financial information from Léargas, the Bernard McNamara-led consortium selected to build the public private partnership (PPP) project.
The letter was sent after more than 20 banks withdrew from the funding process in recent weeks. There is also increasing unease in the cabinet over the future of the project.
Formal contracts between the government and Léargas have yet to be signed, almost a year after the consortium was selected as the preferred bidder to build the prison.
Under the terms of the PPP, the consortium is due to finance and build the scheme and will then receive a contribution from the state over a 25-year period.
Both sides are believed to unhappy with the current agreement, and Léargas has told the state that it will have to contribute more funds to the project if the PPP is to go ahead.
However, the Department of Justice has been told to rein in spending and has allocated just €100,000 next year towards the prison, from its €52 million prison building budget, according to new figures obtained by this newspaper.
The state is now seeking formal assurances that Léargas has access to capital to complete the prison, and that a line of credit is in place. The Léargas consortium includes McNamara, Barclays Private Equity and GSL, the international prison operator.
Léargas has informed the Department of Justice that more than 25 banks originally willing to fund the development have withdrawn from the process and will not now extend any line of credit. The remaining five banks in the process are charging a higher rate for the capital due to the high cost of capital on the global markets.
They include Barclays, British bank Lloyds and Dexia, a European lender that specialises in public finance.
Sunday Business Post