PPP/PFI contracts that closed between 2008 and 2011 are likely to have closed with significantly higher interest rates for debt financing than are currently available in market. The construction phase for these projects is likely to have been completed and, as such, it is possible that they are now an attractive proposition for refinancing. The government of the time mandated certain changes to the refinancing provisions allowing the public sector to, amongst other things, trigger a refinancing and claim a greater share of any refinancing gain. Our lawyers have advised a number of local authorities and funders on refinancing arrangements for complex projects.
As local authorities are expected to find additional savings and efficiencies so, naturally, attention is focussing on the performance of existing contracts and assessing whether the scope of those contracts (which may have been negotiated some years ago) adequately addresses the needs of the local authority and its stakeholders. We can advise you on a range of approaches designed to ensure that the contract is implemented as intended, that the private sector remains incentivised to perform and to identify options for re-scoping the contract to ensure that it remains ‘fit for purpose’ in this more challenging economic environment.