5.  Termination for Convenience

If this Deed is terminated for convenience under clause 46.2, the Termination for Convenience Payment will be calculated as follows.

The Termination for Convenience Payment or TP means the greater of:

TP = A + B - D +/- G - H + J + K + L - M

and

TP = A +/- G - H + J - M

where:

TP =   the Termination for Convenience Payment;

A =  the Project Debt as at the Expiry Date (but disregarding the impact of any modelled payment of the State Contribution on the amount forecast in the Financial Model to be owing to the Financiers as at that date, where such State Contribution is due and payable under this Deed but has not been paid to Project Co);

B =  where the Expiry Date occurs:

(i)  prior to the Date for Commercial Acceptance, the amount set out in the table below which corresponds to the time period in which the date of termination under clause 46.2 occurs:

[State Note: Respondents are to bid a fixed value required to compensate equity in respect of each 6 month period after Financial Close to the Date for Commercial Acceptance. Respondents to insert additional periods as required.]

(ii)  on or after the Date for Commercial Acceptance, the value of the equity as assessed by the Independent Expert as set out below.

The value assessed by the Independent Expert under paragraph (ii) must be determined through a discounted cash flow valuation for the period from the Expiry Date to the Final Expiry Date.  The valuation must apply paragraphs (iii) - (v) below, and apply generally accepted principles and practices for cash flow valuations of assets.  The Independent Expert must take into account:

(iii)  the projected revenue to an incoming Project Co reasonably expected assuming:

A.  the provisions of the Payment Schedule and those relating to payment of the Floating Rate Component and the State Contribution continue to apply; and

B.  the arrangements for those commercial opportunities not retained by Equity Investors following termination, including any revenue-sharing with the State, continue to apply;

(iv)  the projected capital and operating costs reasonably expected to be incurred by an incoming Project Co in connection with delivering the Project Activities, and assuming the Services are delivered in accordance with, and to the standards set out in, the PSDR and otherwise in accordance with this Deed; and

(v)  the financing costs of Project Co under the Finance Documents as calculated in the Financial Model but adjusted where those costs are reasonably expected to change because the Finance Documents require refinancing after the Expiry Date,

and in each case on the basis that the Project Documents, as amended in accordance with this Deed, continue in full force and effect from the Expiry Date to the Final Expiry Date.  To prepare the projections referred to in paragraphs (iii) and (iv) above, the Independent Expert is not constrained by values in the Financial Model, and should apply reasonable contingency to cash flows to account for Project risks.  The Independent Expert must discount cash flows using a rate per annum equivalent to market rates of return to equity for projects with a similar risk profile to this Project;

D =   any Liability of Project Co to the State under the State Project Documents, including all amounts in respect of which the State is entitled to exercise a right of set-off under this Deed (but subject to clauses 43.11(c) and (d) (other than clause 43.11(d)(vi)(E)(3)));

G =  the amount of costs incurred or gains realised by Project Co (acting reasonably) as a direct result of terminating the Finance Documents, including as a result of terminating or reversing any derivative position or arising from prepayment of debt or interest, in each case arising from the State's election to terminate for convenience under clause 46.2.  If the net amount is a gain, it should be a deduction from, and if it is a cost, it should be an addition to, this Termination for Convenience Payment;

H =  the aggregate of:

(i)  any Insurance proceeds:

A.  that would have been received before the Expiry Date but for an Insurance Failure Event and which if so received would have been, or would have been required to be, applied towards any other component of the Termination for Convenience Payment calculated under this section 5; and

B.  received or receivable by Project Co at any time during the period between the Expiry Date and the Compensation Date, except for Insurance proceeds:

1)  that are required under the Project Documents to be (and are) applied to repairing or reinstating the Works or the Project Assets; or

2)  representing Insurance indemnification of Project Co against liabilities to third parties;

(ii)  any other amounts owing to Project Co; and

(iii)  any credit balances standing in accounts held by or for the benefit of Project Co on the Expiry Date (other than those amounts which Project Co holds on trust for a subcontractor in those accounts in accordance with the Finance Documents), 

in each case only to the extent it has not otherwise been taken into account in calculating the Termination for Convenience Payment;

J =  any amounts owing by the State to Project Co under the State Project Documents as at the Expiry Date (including the amount of any Service Payments or Floating Rate Component which has accrued but not been paid as at the Expiry Date) but excluding any State Contribution which is owing as at the Expiry Date;

K =  redundancy payments for employees of Project Co that have been or will be reasonably and properly incurred by Project Co as a direct result of the termination of this Deed and which would not have been otherwise incurred if this Deed was not terminated under clause 46.2;

L =  the State's Liability to Project Co for any Subcontractor Termination Amounts, but only to the extent specified in clause 9.3(g)(iii) to (vi); and

M =  any third party amounts paid to Project Co at any time during the period between the Expiry Date and the Compensation Date.

In calculating items A to M, there will be no double counting of amounts.