The direct agreement of the lenders: This is a tripartite agreement between the authority, Projectco and the lenders, under which the authority undertakes to give the lenders a period of time to give the lenders notice of the imminent termination of the project agreement. This Agreement also provides lenders with the opportunity to intervene, either directly or through an agent or representative, to resolve the termination event or to find another party acceptable to the authority to assume Projectco`s rights and obligations under the Project Agreement. Host governments/contracting entities: The government of the country where the project is based is likely to be involved in the issuance of permits and permits at the beginning and throughout the life of a project. The successful client is the sponsoring municipality that enters into the project agreement with Projectco. Financing agreements: The financing agreement is the main document between the lenders and Projectco and contains the terms of the financing of the project. Lenders will also need a set of guarantees and guarantees to protect the funds lent. The loan agreement is explained in more detail in our separate OUT-LAW guide on key issues for lenders in project finance agreements. Project Sponsor: The person who plays an active role in the management of the project. The project promoter owns Projectco and receives profits, either due to projectco ownership or through management contracts, if the project is successful. The project proponent often has to cover certain liabilities or risks of the project by providing guarantees or entering into management or service agreements. Service Agreements: Projectco enters into service agreements with service providers and communicates its delivery obligations under the project agreement to these contractors.

As above, service providers offer guarantees in favor of the authority and the authority has entry-level rights in certain circumstances – again subject to the rights of lenders. A direct agreement is an agreement that gives project lenders direct rights to certain key project documents. These rights are explained in direct agreements in project finance operations – important provisions. Lenders: Commercial banks, investment banks or other institutional investors that provide the leverage effect of project financing. The sheer scale of typical project financing means that most loans cannot be made by a single lender. Instead, a group of lenders forms a syndicate. Account Banking: A single lender maintains the accounts through which all the money generated by the project flows. Equity investors: Lenders or project promoters who do not expect to play an active role in the project. In the case of lenders, in addition to lending by debt, they will hold an interest to obtain a better return if the project is successful. In most cases, any investment in the form of shares is associated with an agreement that allows the equity investor to sell their shares to the project promoter if the equity investor wishes to leave the project. The project promoter may also have the opportunity to buy back the shares. Regulatory guarantee agreements: These have emerged as an extension of the concept underlying the direct agreement of lenders.

Ancillary agreements shall be concluded between the Authority and contractors entering into contracts with Projectco. If Projectco fails to meet its contractual obligations during the construction phase, the authority can ensure that the project is completed by taking the corresponding order from Projectco. In addition, the agency can accept Projectco`s operating contract when the project is terminated. Construction Contract: Projectco enters into a construction contract with the Contractor, under which Projectco`s construction obligations under the Project Contract are transferred to the Contractor. Except as otherwise provided in such lender`s direct agreement, such lender`s direct agreement constitutes the entire agreement between the parties in relation to its subject matter and supersedes all prior representations, representations, negotiations and understandings, whether oral, written, express or implied, with respect to the subject matter of such lender`s direct agreement. Project Agreement: The Project Agreement is the primary agreement for each PFI project and governs the relationship, rights and obligations between the Authority and Projectco throughout the duration of the Project. It can also be called a concession contract. In early PFI projects, it was common to enter into separate agreements for different phases of the project. B e.g.

a development agreement for the design and construction phase and an operation or facilities management agreement for the operation phase. Nowadays, however, it is more common to have a single project agreement that covers all aspects of the project. Collateral Collateral Guarantees: Lenders and the agency typically require contractual guarantees from key contractors and consultants appointed by Projectco. In particular, the value of guaranteed guarantees for the Authority is that they protect the Authority`s position after the end of the project if the Authority`s losses exceed the value of the constructed (or partially constructed) project. In addition to this security, project funders generally expect direct contractual relationships with counterparties for the most important project documents. This is achieved through direct agreements. Project funders generally assume the security of all rights of the project company under the most important project documents as part of the security package (see Practical Note: Security in Project Finance Operations). Direct agreements are also generally referred to as ”tripartite agreements”, which reflects the fact that it is an agreement between three parties, i.e. the contractor and the planning team provide guarantees in favour of the authority and the lenders. Lenders usually have the first right to enter into the construction contract instead of Projectco. All rights vested in the authority are generally subject to the rights of lenders.

Insurers: Insurers are essential to a project. If the project is affected by a disaster, developers and lenders turn to insurers to cover the losses. Subcontracts: Projectco enters into various subcontracts to disclose the risks it incurs under the project agreement. It is common for Projectco not to carry out any of the key activities itself, but rather to be a vehicle for the formation of contracts associated with the project – hence the term ”special purpose vehicle”. Agent: One of the lenders is appointed as an agent and acts on behalf of the other lenders to manage the loan. The type of structure used depends on the type of facility included in the project and the person responsible for operation after the completion of the construction phase. The types of projects for which project financing is commonly used are: Suppliers, Contractors and Customers: This includes the material suppliers for the project, the contractors responsible for the design and construction of the project, and the clients of the project. | Out-law Guide August 30, 2011 | 4:31 p.m. | Read 8 min. Construction companies: The contractor is one of the most important parts of the project during the construction phase of the project. As a general rule, a contractor`s contract is based on one of two models: if such a provision of that lender`s direct agreement is invalid, unenforceable, or illegal, the parties will promptly negotiate new provisions in good faith to eliminate such invalidity, unenforceability, or illegality, and that lender`s direct agreement is as close as possible to its original intent and effect. Restore.

In the UK, most project funding has been carried out under the government`s Private Finance Initiative (IFP) and is known as public-private partnerships (PPPs). PFI was introduced in the early 1990s and aimed to introduce private sector skills and finance into the provision of public sector services. PFI is structured in such a way that the private sector receives funding – usually from a bank – to plan, build and operate a facility for the benefit of the public. In return, the public sector grants this private sector partner a long-term contract for the operation of the plant – usually for 25 to 30 years. .