1.1.1 Clause 34.6 of the model clauses on Refinancing set out in Section 34.8 of Standardisation of PFI Contracts Version 4 ("SoPC4") provides that:
"The Authority and the Contractor will negotiate in good faith to agree the basis and method of calculation of the Refinancing Gain and payment of the Authority's share of the Refinancing Gain (taking into account how the Authority has elected to receive its share of the Refinancing Gain…). If the parties fail to agree the basis and method of calculation of the Refinancing Gain or the payment of the Authority's share, the dispute shall be determined in accordance with Clause 28 (Dispute Resolution)."
1.1.2 This Guidance Note is therefore intended to assist Authorities and their financial advisers in negotiating and agreeing the calculation of the Refinancing Gain, if and when this occurs, and the way in which the Authority's share of the Refinancing Gain is paid.
1.1.3 A series of inter-related steps have to be carried out for this purpose, as discussed in detail in this Guidance Note; a possible timetable for this procedure is set out in Annex I.
1.1.4 Please note that HMT issued an application note dated 9 February 2005 entitled "Value for Money in Refinancing" which can be viewed on the HMT web site.
1.1.5 Capitalised terms used in this Guidance Note are as defined in SoPC4.