Banks give Scottish hospital breathing space

A CONSORTIUM of banks led by Samuel Montagu yesterday gave a troubled Scottish hospital group a breathing space until the end of next week to agree new proposals to avoid collapse, writes Peter Rodgers.

This followed talks over the future of the new pounds 180m Clydebank Hospital, owned by Health Care International, which has had pounds 30m of government support and owes its banks pounds 90m.

HCI confirmed that the hospital would like to bid for military contracts to provide medical services in its specialist disciplines and fill some of its empty beds.

But the company denied a report in the Scotsman that the Ministry of Defence was considering a rescue proposal to turn it into a military hospital. 'We don't want to be a military hospital but our aim is to provide some services if appropriate,' a spokeswoman said.

Bank lenders, which include Credit Lyonnais, ING Bank, Midland and Royal Bank of Scotland, are believed to be taking a supportive line, but the hospital has so far opened only 48 of its 260 beds and is thought to need an extra pounds 15m.

Banks are looking at options for a financial reconstruction including debt-for-equity swaps, which would give them a bigger stake. Existing shareholders include John Laing and British Aerospace, which invested pounds 8m.