What Is A Direct Agreement In Project Finance

Real estate documents: if the project includes land development, real estate documentation will be required to reflect the interests of the government and Projectco, as well as the proposed ownership position at the end of the project term. Some common structures are: suppliers, contractors and customers: these include suppliers of materials for the project, contractors responsible for the design and construction of the project and project customers. The ability of lenders to terminate, during the specified period or after a failure under the facility agreement, the possibility of designating a company that will assume the rights and obligations of the project company in the project document; A key feature of project financing is that it is generally limited recourse financing, which means that lenders rely only on project revenues and assets to recover their investments. As a result, project financing operations pose a high risk to lenders, particularly for green prairie projects. Because of this risk, particularly in the pre-business phase of a project, a quality security package, which reduces risk as much as possible, is essential to protect the interests of lenders. Construction contract: Projectco will enter into the construction contract with the contractor under which Projectco`s construction obligations from the project contract will be transferred to the contractor. While the inclusion of direct agreements and vulnerability measures in the transaction document package may seem repetitive, they play a different role and provide lenders with broader security. The two documents are complementary in the creation of lenders` rights and offer lenders favourable options for the project. a project counterparty such as the contractor, the operating and maintenance company, the equity investors: lenders or project proponents who do not expect an active role in the project. In the case of lenders, they will have an interest in in addition to the granting of loans as debt financing in order to obtain a higher return if the project is successful.