Other matters related to termination payments

When defining compensation payments on termination, the PPP contract will have to tackle a number of other issues, such as:

•  the treatment of subcontractors' costs and profits forgone as a result of termination;

•  the treatment of mezzanine or other subordinated debt (i.e. should these be dealt with as senior debt or equity?);

•  the treatment of cash balances in reserve accounts;

•  the treatment of insurance proceeds; and

•  the choice of a discount rate for the present value calculation (e.g. nominal or real? pre-tax or post-tax? weighted aver-age cost of capital?).