The Contracting Authority's right to consent is important as it is what will bring the Private Partner to the negotiating table. As mentioned above, if a particular refinancing is already factored into, or is as contemplated by, the Original Base Case, then it is reasonable for Contracting Authority consent not to be required or to be subject to fewer constraints than other refinancings.46 However, its right to consent should be exercised reasonably. The Contracting Authority should bear in mind that a refinancing resulting in gain is likely to benefit it financially and even a rescue refinancing will help save the PPP Project. Nevertheless, the Contracting Authority should only consent if it is confident that the refinancing will not have a negative impact on the PPP Project or on its own liabilities without providing it with sufficient commensurate benefit. This will include assessing any increase in any termination payments for which it is liable as described in Section 4, Termination Payments. See Section 5.3, Sample Drafting 5, Clause (3).
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46 In some markets in the United States, rescue refinancings that do not result in an increase in the Private Partner's outstanding debt above a certain percentage threshold may be permitted without the consent of the Contracting Authority, as may refinancings where the Private Partner provides satisfactory evidence that its aggregate debt is no less than a specified percentage of the fair market value of the PPP Contract.