1.22 When the Supplemental Deed was signed, Laser had:
■ £2 million of cash reserves;
■ access to nearly £17 million through its debt facilities;
■ a commitment from John Laing plc that, under the Supplemental Deed, JLC Ltd would execute works estimated to cost about £42 million in return for a maximum payment of about £6 million6; and
■ a revenue stream of £600,000 per month from the Department for nine completed modules.
1.23 In late 2001, however, Laser's operating expenditure and debt interest payments averaged respectively about £170,000 and £450,000 per month. Later, as JLC Ltd finished its work on each phase, as defined in the Supplemental Deed, Laser needed cash both to pay John Laing plc and to fund the additional works needed to complete the phase to the Department's output specification. Laser's monthly capital expenditure therefore grew. In the first six months following the signing of the deed, Laser's cash outflow, net of cash receipts, averaged £180,000 a month (Figure 8 overleaf). By summer 2003, the cash outflow had grown to over £1.2 million a month before falling to a monthly outflow of £310,000 in 2004.
1.24 Altogether, between November 2001 and June 2004, Laser spent nearly £12 million to complete the construction phases after JLC Ltd had completed its work under the Supplemental Deed. During this period, Laser's net cash outflow was just over £18 million. As a result, by July 2004, Laser had exhausted its debt facilities and had under £1 million of cash reserves. However, Laser had still not fully completed the laboratories (Paragraph 1.12).
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6 John Laing plc told us that honouring its obligations under the Supplemental Deed cost it £39 million for which it received £3.5 million from Laser.