In the early period of PFI there were no standard provisions for refinancing gains to be shared between the Authority and the Contractor's shareholders. Only from April 2004 when SoPCv3 was released did sharing become a standard approach. Therefore early waste PFI/PPP contracts may or may not have refinancing gain share provisions. However, for projects that lack such provisions the Contract Manager should be aware that HM Treasury has published a voluntary Code of Conduct which sets out the basis upon which individual Authorities should approach the refinancing by private sector contractors of early PFI transactions. The aim of the code is to enable private sector contractors to share refinancing gain with the public sector on a consistent and equitable basis.
Under the WIDP Contract (Clause 52 and Schedule 16) the Contractor has to give to the Authority 50% of any Refinancing Gain out of the first £1 million, 60% of any further gain up to £3 million and thereafter 70% of any gain. The Authority can take its share as a cash sum, as a reduced Unitary Charge or a mixture of the two.
Under the WIDP Contract (Clauses 7.1 and 7.2), the Authority will have received from the Contractor copies of the Initial Financing Agreements listed in Schedule 5. If these Financing Agreements are amended or new Financing Agreements are entered into, the Authority is entitled to certified true copies of the amendments or new agreements.
Under Clause 7.4.1, the Contractor must seek the Authority's prior written consent to any change to the Financing Agreements that could have a material adverse effect on the Contractor's ability to perform its obligations under the Ancillary Documents (as listed in Schedule 5) or the Contract.
Similarly, under Clause 7.4.2, the Authority's prior written consent is required before the Contractor can amend, waive or exercise a right under any Financing Agreement that would increase the Authority's liabilities on early termination.