Rothschild advised the Prison Service that it would face higher termination liabilities as a result of the refinancing

1.19  On the recommendation of its advisers, the Prison Service sought more detailed information from FPSL about the refinancing. Rothschild then analysed the effect of the proposed refinancing on the Prison Service's termination liabilities and gave the Prison Service some preliminary advice as to how they could approach the refinancing situation. Rothschild's advice took into account further information from FPSL, that the amounts which FPSL would owe to its lenders in the event of premature contract termination might include additional costs in breaking the fixed interest rate arrangement.

1.20  Rothschild calculated that the Prison Service's maximum termination liabilities would reduce over time more slowly following the refinancing. They showed that the maximum termination liabilities would bebetween£8million and £47 million higher than previously anticipated, depending on when termination of the contract occurred (Figure 3). In present value terms, the increase in termination liabilities would be up to £13.5 million.