2.21 To maximise the loan repayment period and hence the resulting refinancing gains, which both the Trust and THC Dartford would receive, the Trust agreed to THC Dartford's proposal that the minimum contract period should be extended from 28 to 35 years. The Department agreed with this as it brought the contract period into line with more recent PFI hospital deals. The Trust's financial advisers Ernst & Young also note that, as the refinancing was to be bond financed on terms linked to the contract period, it would not have been straightforward for the Trust to seek an extension to the minimum contract period once the refinancing had been carried out.
2.22 The Trust obtained THC Dartford's agreement that the refinancing gain that was dependent on the contract extension would be shared 50/50. This was better than the basic 30 per cent entitlement under the code and treated the extension as similar to a new contract on which the Treasury's guidance now expects refinancing gains to be shared 50/50. It could be argued that THC Dartford was not exposed by the contract extension to as much risk as in a new contract where the construction has yet to be undertaken. THC Dartford, however, resisted the Trust's attempts to seek more than 50 per cent of the gains as it did not consider the refinancing would have been economically worthwhile on this basis. THC Dartford considers that it faced new risks as a result of the contract extension in ensuring that a gradually ageing building would continue to be fit for purpose.