2.48 Given that the refinancing has enabled THC Dartford's shareholders to receive in 2003 more than they had previously expected over the life of the contract there is a potential risk that THC Dartford may no longer have an incentive to perform well over the remainder of the contract. This particularly relates to Carillion, the main service provider, who has benefited from the refinancing and subsequently reduced its exposure to project risk by selling its shareholding in THC Dartford. Carillion and THC Dartford consider, however, that they each still have strong incentives to perform well as:
■ THC Dartford's current shareholders still have projected revenues with a net present value of £13.6 million to earn over the remainder of the contract. The current shareholders also have their original investments totalling £13 million still invested in the project. The bondholders have £132.5 million invested in the project. Recovery of these investments and receipt of future revenues from the project will be dependent on satisfactory performance by Carillion who continue as the main sub-contractor. Their performance will be monitored closely by the current shareholders and MBIA, the monoline insurer of the bond issue. Following the refinancing in March 2003 there were some lapses in service performance during July to September 2003 but the overall performance of Carillion and THC Dartford in service delivery has since been satisfactory;
■ THC Dartford's previous and current shareholders and contractors would not want to risk their reputation being adversely affected by poor performance as this would prejudice their ability to bid successfully for future PFI contracts. In addition, by withdrawing their equity investment in this project, Carillion is freeing up resources to bid for, and invest in, other PFI projects which should assist the competitiveness of the PFI market;
■ THC Dartford has informed us that the amounts that Carillion still has at risk, in respect of its obligations as a contractor to the project, are significantly more than Carillion received on realising its investment in THC Dartford; and
■ Before agreeing that Carillion could sell its shares the other shareholders in THC Dartford (and Barclays Infrastructure Ltd, the purchaser of Carillion's shares) would have assessed the risks associated with Carillion's future performance as a service provider and been satisfied that they expected Carillion, for the reasons set out above, to continue to perform in accordance with its contractual obligations. The purchaser of Carillion's shares would have taken these matters into account in reaching agreement on the £5.2 million price which was paid for the shares.
The increase in the Trust's termination liabilities could, however, make it less willing to terminate the contract either voluntarily or in circumstances where THC Dartford was in default if alternative actions such as replacing contractors has not remedied the project difficulties.