1.18 As an early private finance initiative deal, the contract did not provide for the Department to share in Mapeley's financial gains if it refinanced its debt and achieved better terms. In 2002 the Office of Government Commerce issued guidance recommending that future contracts should include provisions for equal sharing of refinancing gains. It also introduced a voluntary code of conduct for departments to share 30 per cent of refinancing gains arising in earlier contracts.
1.19 In early 2005 Mapeley sought the Department's approval to refinance its debt. The Department employed an external adviser to undertake due diligence to ensure the arrangements did not expose it to new or additional risk. It secured a share in the gain, and complied with the Office of Government Commerce code of conduct. It did not accept Mapeley's initial proposals, but worked with Mapeley to reach an agreed position, and the refinancing took place during 2006. Mapeley's objectives in refinancing were to reduce the cost of debt and loan administration. There was no cash payment to shareholders. The Department received £894,900, 30 per cent of the gain. The Department and Mapeley incorporated provisions into the contract in September 2006 entitling the Department to receive 30 per cent of future gains.