A method of borrowing by which debt is raised from a wide variety of individual or institutional investors. Bonds usually carry a fixed coupon payable by the issuer (borrower) to the bondholder (investor) and have a predetermined repayment date. | |
The costs (or profits) of withdrawing from interest rate hedging agreements prior to the end of the contracted period for such agreements. The extent of costs (or profits) incurred depends on the nature of the hedge and the market conditions prevailing at the time of breakage. | |
Accounts set up by the project company containing cash balances earmarked to meet future liabilities as they arise, for example cost overruns on the construction of the prison or future major maintenance programmes or debt service. | |
The periodic instalments of loan principal and interest, and associated fees and commissions, due from a consortium to its lending banks. | |
The percentage rate applied to cash flows to enable comparisons to be made between payments occurring at different times. The rate quantifies the extent to which a sum of money is worth more to the Government today than the same amount in a year's time. | |
A rate of interest which is guaranteed not to change for the period over which the fix prevails. | |
A rate of interest which varies periodically in accordance with a stated market reference, usually the London Interbank Offered Rate (LIBOR). | |
Fazakerley Prison Services Limited; the consortium company - set up and owned by Tarmac (now Carillion) and Group4- which has entered into the contract for the Fazakerley prison with the Prison Service. | |
Instruments used by the consortium company to manage the risk of variations in future interest rates. In most cases, the company will choose to fix its future interest rate thereby providing it with surety about what its financing charges will be. | |
An additional amount that a bank charges on a commercial loan over and above its own cost of providing the loan. The margin serves to provide the bank both with a profit and compensation against the risk of not having the loan repaid. | |
A formal communication to selected suppliers. | |
A defined term in the contract between FPSL and the Prison Service which, in certain circumstances, determines the amount of compensation payable by the Prison Service to FPSL's banks in the event of the contract being terminated prematurely. It is based on the aggregate of outstanding loan principal and interest and breakage costs, less amounts standing to the credit of the equity reserve. | |
The discounted value of a series of payments occurring over time taking into account the extent to which a sum of money is worth more to the Government today than the same amount in a year's time. | |
The issue of bonds to a limited number of select institutions. | |
The process by which the terms of the funding which was put in place at the outset of a PFI contract, are later changed during the life of the contract, usually with the aim of creating refinancing benefits for the consortium company. | |
The benefits to shareholders of increasing and/or bringing forward their returns from the project as a result of changes to the financing structure of the consortium company. | |
The net present value of the contract to FPSL as at the date of termination, as defined in the contract between FPSL and the Prison Service. | |
Payments made by FPSL to its shareholders (Tarmac – now Carillion – and Group4) in the form of dividends, interest on subordinated debt, and repayment of subordinated debt principal. | |
Debt that, in the event of bankruptcy, must be repaid before subordinated debt receives any repayment. Senior debt lenders have the highest ranking claim over the assets of the project company compared to all other lenders and investors. | |
Debt over which senior debt takes priority. In the event of bankruptcy, subordinated debt lenders receive payment only after senior debt is paid off in full. | |
The date by which the last instalment of principal is due so that the loan is repaid in full. | |
The amount of compensation payable by the Prison Service to FPSL's banks in the event of premature contract termination (see paragraph 2.21 and footnote 11, page 19). Depending on the circumstances of the termination, the compensation may be lender liabilities or the residual value of the contract. | |
The single periodic payment due from the Prison Service to FPSL in respect of the provision and operation of the prison. | |
In this context, cash flows resulting from the variations in current assets and liabilities of FPSL. |