23 The £400 million EIB and £150 million KfW facilities arranged in May 2003 and effectively maturing in 2008, are expected to be refinanced and converted into longer term lending. By 2007, Section 2 construction should be complete and this would allow for another securitisation of track access charges and domestic capacity charges. If this were structured on a similar basis to the Section 1 securitisation, it could include rolling the EIB and KfW facilities into the securitisation and extending their term.
24 The commercial bank debt would also be fairly straightforward to refinance because, as a revolving facility, it can be repaid at any time. In cost terms it would seem the most appropriate debt to refinance because it is the most expensive facility LCR has at LIBOR + 55 basis points during 2004 and 2005. However, as a flexible revolving facility, it could prove very valuable to LCR over the next two years when LCR will be funding the bulk of construction of Section 2. Any future refinancing should be carefully considered in its effect on the total funding structure and whether the refinancing would maintain an appropriate balance of flexible short term facilities and long term debt matched to predictable future cash flows.