21.3.1 Capital contributions during the construction phase have the potential to result in better value for money for the Authority where they can be linked to appropriate milestones and thresholds of diminished risk. Authorities should demonstrate to Infrastructure UK that the financial savings resulting from the timing of capital contributions outweigh any additional risks in the context of construction and operational risks posed to the Authority.
21.3.2 Funders, equity investors and subcontractors should not seek to have Authorities provide date certainty for payments i.e. payments should be linked to actual delivery of milestones rather than scheduled dates. If there is any rescheduling of Senior Debt drawdown, Authority capital contributions should be withheld until the Authority is satisfied that no drawdown of Senior Debt or equity is retired behind those of the Authority and that the ratio of private capital to Authority capital is not adversely affected. The following is required drafting to ensure that the ratio of private capital to Authority capital is not adversely affected:
21.3 Capital Contributions
The ratio of private sector funding (including Senior Debt, Junior Debt and share capital) drawn down as compared with Capital Contributions made shall at all times be that determined from the Base Case.
21.3.3 The effect of this is that if private finance contributions are delayed or retired beyond the originally scheduled dates then capital contributions should be retired to the same extent to avoid breaching the ratio requirement.