Agendas, Meetings and Minutes - Agenda item

Agenda item

Risk Register (Agenda item 6)

Minutes:

The Committee considered the Risk Register.

 

In the ensuing debate, the following points were made:

 

·         Was it anticipated that the contract negotiations would be concluded soon? Jim Heywood responded that the County Council had requested that the finance teams of both councils and MWM meet to discuss amendments to the existing offer and consider any necessary legal changes to the original contract. The Council had requested a response by 20 January 2020 and he had drafted a proposal for consideration by the shareholders of MWM. A meeting would then take place in early February 2020 between shareholders and representatives of the County Council to agree a way forward. There was pressure to conclude negotiations whether contract was amended or not

·         If a deal was agreed, what impact would it have on the ability of MWM to be able to repay the loan? Jim Heywood indicated that if MWM were required to put more funds into the contract, there would be an impact on the overall funding available to the company. It was a matter for this Committee and KPMG to determine whether there was an impact on the loan repayments

·         Would there be a risk to repayments if the Council began a re-procurement exercise at this point? Jim Heywood advised that in that event, the current contract would remain in place until it ended in 2023 and the ratio analysis would be unchanged as it would not be impacted by ongoing savings

·         In response to a query, Rob Wilson explained that KPMG had been requested to examine the impact on the ratio test and the financial model of the revised contract and it was hoped that this would be achieved before the end of January

·         In response to a query, Rob Wilson commented that due to the fact that the updated financial model had not been agreed, it was not possible to complete the ratio analysis. There was a duty to review the ratio analysis and hence a risk had been included on the risk register if the requirements of the contract were not met

·         The issue of the payment of dividends as referred to in the KPMG report was not a matter relevant to the Committee’s consideration

·         The Chairman suggested that the Committee inform Council that it had been unable to complete a number of financial ratio calculations required as part of the contractual Senior Term Loan Facility agreement between the Council (the lender) and MWM (the borrower). This was because of not having an updated Financial Model due to ongoing savings negotiations between the client (the Council) and MWM which had been continuing for some time. He added that the Committee should ask the Council to look to complete and finalise these negotiations as soon as possible in order that the Committee could request an updated financial model and assess the implications on the ability of MWM to repay the existing loan. This suggestion was discussed by the Committee but it was felt premature given that the negotiations between the client and contractor were expected to be completed by the end of January. It was therefore concluded that there were no matters of concern to report to Council.

 

RESOLVED: that

 

a)    The open risks set out in the Risk Register are accepted; and

 

b)   There were no matters of concern to report to Council.

Supporting documents: