(a) (Refinancing Gain calculation): A Refinancing Gain arises where a Refinancing Event results in A - B being greater than zero, where A and B are defined as:
A = the present value of the Distributions projected (using the Financial Model updated to reflect only the terms of the proposed Refinancing and in no other respect) at the proposed date of, and after executing, the Refinancing Event, discounted using the Equity IRR as set out or determined in the Financial Close Financial Model; and
B = the present value of the Distributions projected (using the Financial Model) immediately prior to the Refinancing Event (without taking into account the effect of the proposed Refinancing Event), discounted using the Equity IRR as set out or determined in the Financial Close Financial Model,
(b) (State's entitlement to Refinancing Gains): The State is entitled to:
(i) 100% of any Refinancing Gain arising from a change in the manner or timing of payment of a State Contribution; and
(ii) 50% of the benefit of any other Refinancing Gain but only to the extent that after payment of such amount to the State under this clause 37.4, the Equity IRR over the Term as reflected in the Financial Model (taking into account the proposed Refinancing Event and all previous Refinancing Events) would be at or above the Equity IRR over the Term as reflected in the Financial Close Financial Model (without taking into account the proposed Refinancing Event or any previous Refinancing Event),
(State Share of Refinancing Gain).
(c) (State's election on Refinancing Gain): The State may, after taking into account the nature and timing of the Refinancing Gain, elect to receive the State Share of Refinancing Gain as:
(i) a direct payment (but only to the extent a Project Entity receives its Refinancing Gain as a direct payment or to the extent that a Project Entity receives a lump sum payment or is able to pay all or part of the Refinancing Gain to another party as a lump sum payment as a result of the Refinancing (for example, upon a release of funds from a reserve account));
(ii) a reduction in the Service Payment; or
(iii) a combination of the above.
(d) (Negotiate in good faith): The State and Project Co must negotiate in good faith to agree the manner and timing of payments of the State Share of the Refinancing Gain on the basis that the State is to be paid the State Share of Refinancing Gain not later than when a Project Entity receives its share of the Refinancing Gain and subject to the State's rights under clause 37.4(c).
(e) (Information): Project Co must provide the State with all information concerning the Refinancing, projected Distributions and the Project that the State may require to calculate the Refinancing Gain and the State Share of Refinancing Gain.
[Note: In circumstances where the State has elected to hedge the base interest rate risk, Project Co must pay any costs associated with the State having to adjust the hedge due to Refinancing.]