The Enhanced Return would have been the money paid to the DCBC if there was an excess Base Amount after the Annual Requirement (and any Additional Funds Outstanding balance) was paid. The Enhanced Return would have been paid up to a maximum annual return on Invested Equity of 15%. With the DCBC and the Concession Agreement both now defunct, this is now of course of historical interest only.
The Memorandum of Intent describes the enhanced return (my emphasis)::
- This enhanced return shall be remitted by the GNWT out of the Base Amount in the amount by which the Base Amount exceeds the Annual Requirement up to a maximum annual return of 15% on deemed equity.
To my (non-lawyerly) eyes it isn't clear if the Enhanced Return brings the total return on equity to 15%, or is an additional 15% above and beyond the 4.5% guaranteed Base Return. However, the Concession Agreement wording seems to be clearer:
- Enhanced Return Amount means, for each Concession Year, the amount (if any), by which the Base Amount exceeds the Annual Requirement and any Additional Funds Outstanding Balance for such Concession Year up to a maximum amount of fifteen percent (15%) per annum of the Invested Equity, as determined as of the last day of such Concession Year.
So for an example with $5 million in Invested Equity (and assuming sufficient Excess Funds and no Additional Funds Outstanding), an "amount of 15% per annum" would be $750,000. But section "11.3 (a)" calls for the Base Return portion ($225,000) to be paid during the year, and "11.3 (d) ii" calls for payment of the Enhanced Return Amount after the year is over (if excess funds exist). So 4.5% would already have been paid out, then another 15%, leading to a potential return of 19.5% ($975,000), not 15% before sharing with the GNWT begins. If it is a combined 15% total, it would be $750,000.
|This artice defines a term from the now-terminated Concession Agreement.|