5. The term refinancing is actually quite broad in its scope; a useful definition found in the Standardisation of PFI Contracts, Version 4, published March 2007 is as follows:
o During the life of the Project, the Contractor may wish to replace, augment or change the structure, nature or terms of the financing solution that it put in place at Financial Close for the purposes of financing the Project. Where such restructurings or changes will have the effect of increasing or accelerating distributions to investors or of reducing their commitments to the Project, these effects are individually and collectively referred to as Refinancing Gains.
o A non-exclusive list of transactions which could be undertaken by the Contractor following financial close and which could give rise to a Refinancing Gain is set out below:
▪ reduction in interest margins;
▪ reduction or release of reserve accounts;
▪ release of contingent junior capital;
▪ extension in the maturity of debt;
▪ increase in the amount of debt; and
▪ refinancings undertaken without the direct involvement of the Contractor, for example through a special purpose holding company, but which rely upon rights being granted in respect of the cash flow, assets or contracts of the Contractor."