1. Fixed or variable delivery: the supplier undertakes to provide the project company with a fixed quantity of deliveries according to an agreed schedule or a variable delivery between an agreed maximum and a minimum. Delivery can be made under a take-or-pay or a take-and-pay. However, overall, well-designed project funding documents are one of the keys to successful project funding and should be adopted in the same way by project sponsors as by project participants. Project funding documents are summarized below. Tripartite documents are project financing documents, usually required by project lenders to establish a direct relationship with themselves and with the counterparties to the contract. Tripartite acts are sometimes referred to as acts of approval, direct agreements or ancillary agreements. 4. Toll contract: the supplier is absolutely not obliged to deliver and may choose not to do so if the deliveries can be used more profitably elsewhere.
However, the availability fee must be paid to the project company. The credit agreement will generally recognize two different phases for PFI projects: the construction phase and the operation phase. Given that there are so many documents in project funding that are needed by different stakeholders, who want them to be written by their own lawyers, it seems inevitable that there will be too many documents and too many lawyers. Despite the army of lawyers involved in the development of project documents, it is almost certain that there will still be gaps due to the absence of provisions or documents, or that there will be overlaps due to double provisions or documents. With legal teams for project lenders, project sponsors, equity investors and public authorities, conflicts are guaranteed because they all have different interests. The interconnection agreement shall lay down the provisions, including the following provisions. Any repayment formula must be structured in such a way that it derives the revenue expected by Projectco. Typically, the formula requires an increase in the value of a minimum repayment and a set percentage of the project`s cash flow for the relevant period to be deducted from the credit facility. The minimum payment must ensure that, in the worst case, repayments are sufficient to ensure that the loan is repaid in full within the maximum term of the loan. The alternative credit repayment formula, a set percentage of cash flow, generally achieves final repayment over a shorter period than the duration of this facility, for example up to two or three years before the end date of maturity in a 20-year mechanism.
The Shareholder`s Agreement (SHA) is an agreement between the project sponsors for the creation of a special entity for purpose (SPE) for project development, ownership and operation. This is the most fundamental structure owned by sponsors as part of a project financing transaction. The shareholders` agreement covers: the purpose of these funds is carefully documented in the credit agreement to ensure that their use is limited to their purpose. This involves channeling payments or uses through dedicated project accounts, whose payments can only be made for agreed purposes….