Ballast plc entered administration when it was part-way through delivering a programme of major refurbishment of six schools for East Lothian Council under a PFI contract to refurbish and maintain the schools and build and maintain a new community centre. Ballast had been experiencing liquidity difficulties which resulted in the insolvency of sub-contractors, but had a strong parent company which was expected to support it. When the parent company removed its support, leading to administration, the other equity providers - Noble PFI Fund (subsequently acquired by Infrastructure Investors) and Forth Electrical Services - who together held 60% of the PFI contractor Innovate (East Lothian) took the lead in dealing with the administrator, then successfully sourcing replacement construction and facilities management contractors and stabilising the supply chain. The overall project cost, taking into account the cost for new contractors to step into the project, was very significantly higher than the original project cost and correspondingly increased the funding requirement. This further requirement was met through contractor bonding and guarantees plus additional debt and equity funding.
After extensive financial restructuring and discussions with the Council and Scottish Executive, the project proceeded with the replacement contractors. This gave the Council the refurbishments it had contracted for, at the contracted price, but with an agreed element of delay. There was a further refinancing at a subsequent date around certain risks which the replacement construction contractor had not been prepared to accept. Overall, in a situation of extreme financial distress, the Council secured substantively the schools and services which it had originally contracted for and the PFI equity providers, in conjunction with the lenders, played a central role in returning the project to stability and delivering the services.