HM Treasury has now released another addendum to the SoPC4 refinancing provisions which further amend the refinancing provisions of SoPC4 "in the light of the current state of the financing market".
The changes are intended to:
- ensure that, where there is a reduction in lender margin arising as a result of a qualifying refinancing, 90% of the refinancing gain arising from that reduction will be paid to the authority;
- clarify the sharing arrangements of any other refinancing gain between the project company and the authority (which remain as per previous guidance);
- specify how costs are allocated to the "Margin Gain" element that forms part of a refinancing gain; and
- address the potential for a windfall increase in equity distributions from the project company in the event that there are significant improvements to debt pricing.
The revised provisions are mandatory for all PFI projects that have not reached financial close on 27 April 2012.
The addendum can be downloaded here.
See also our previous e-update of 13/02/09, Refinancing Gains Under the Spotlight Again.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.