1.6 The contract which the Prison Service awarded to FPSL was the first PFI prison contract under the PFI. It made no reference to the sharing of refinancing benefits, by way of a benefit sharing formula or otherwise. As a result, there was no explicit contractual right to a share of the refinancing benefits which FPSL secured in 1999. During the original contract negotiations in 1995, FPSL had not offered the Prison Service any such rights. FPSL considered that there was no certainty that a refinancing opportunity would arise and, if it did, this would be because the project had been successful and any refinancing benefits would therefore be a reward to FPSL for developing the market for PFI prisons. Lazard Brothers & Co. Limited, the then Prison Service's financial adviser, had advised the Service that, if FPSL was able to get benefits from a refinancing, then this was a matter for it and its shareholders so long as there was no increase in liabilities for the Prison Service as a result.7
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7 Paragraphs 2.20 to 2.22 and 2.24 describe how these liabilities arise and how they might be affected by a refinancing.