2.11 Prior agreement of the public sector client would now be needed before a refinancing. Guidance recommends that the private sector party's ability to refinance be limited in the PFI contract if such a refinancing materially and adversely affects the ability of the contractor to meet its contractual obligations.9 In this case the Armouries had no right of prior approval of the refinancing but only learned of it subsequently (paragraph 1.61). The existence of such a right here would have strengthened the Armouries' position when asking for full details of RAI's financial situation since the Armouries could have insisted on the provision of such information as a condition of its agreeing to the refinancing.
2.12 PFI guidance now recommends that the public sector body should have extensive access to the private sector party's underlying financial records, as well as the published annual accounts.10 On this deal the Armouries' rights of access were limited (paragraph 1.61). Such access would have enabled the Armouries to establish earlier the exact extent of RAI's financial difficulties. The Armouries has negotiated improved access rights to RAI's financial information under the revised 1999 agreement.
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9 Standardisation of PFI Contracts paragraph 14.6.8