1.20 As a result of the refinancing, NATS now also has more assured access to its £300 million Capital Loan facility which is earmarked to fund much of the Company's £1 billion Investment Programme over the next ten years. Like the Working Capital facility, this loan was unavailable to the Company following September 11th because the Company could not clearly forecast that it would be able to meet the repayments in the longer term. In this context, NATS' management decided to defer major elements of the capital expenditure programme.
1.21 The facilities provided by the banks have now been restructured to make them more like corporate loans than the previous project finance structure, whilst ensuring that the banks could still syndicate them. In order to retain access to these facilities NATS now has to meet less onerous financial covenants. In particular its finances are now required to comply with fewer debt cover ratios. The tenor of the facilities was reduced from 20 years to 10 years in the case of the Acquisition Loan and five years for the Capital Loan and Working Capital facilities. While long term forecasts are still required, breaches of financial ratios in future years can now be rectified through notional drawings on the newly created Liquidity Reserve Account and Standby facility, thereby improving the robustness of the financial structure. Furthermore, the financial forecasts that the company is required to provide will, in the event of a dispute, now be reviewed by an independent arbitrator on these matters, rather than by a bank nominee as was previously the case. There has also been a loosening of the bank oversight regime, giving NATS' management more flexibility and control in the running of the business. For example there is no longer a requirement for the banks' Technical Adviser to have approved the Company's Business Plan.
1.22 The Banks' margins and fees were also revised. These are now determined by the company's credit rating in the investment market, so that they are dictated by the company's future performance rather than being subject to a pre-defined upward ratchet. As a result margins and fees payable prior to syndication of the bank facilities were reduced. The banks also agreed that the new investment from BAA plc and the government would rank equally for interest payments with bank debt in some circumstances.