Frequent question: Are direct agreements security documents?

Is a direct agreement Security?

While on one hand, direct agreements allow lenders to step-in and fulfil the borrower’s obligations in the event of breach of a project document by the borrower, security cessions on the other hand, provide lenders with the option to step-in and enforce the borrower’s rights against the counterparty in the event of …

What is direct agreement?

Direct Agreement means a direct agreement entered into by a Credit Party, the counterparty to a Material Contract and the Lender in respect of the assignment of the rights of the Borrower, and the exercise of step-in rights by the Lender under, such Material Contract, in form and substance satisfactory to the Lender, …

What is the purpose of a direct agreement?

A direct agreement is an agreement which gives the lenders to the project direct rights in respect of certain key project documents. Those rights are explained in Direct agreements in project finance transactions—key provisions.

What is a project loan agreement?

Project Financing Agreement means a loan agreement, installment sale agreement, lease or other document or instrument to which the Director is a party including those between the Director and a Contracting Party, each as amended or supplemented from time to time, in which a Contracting Party acknowledges that it has …

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Why is project finance off balance sheet?

Project Financings Are Off-Balance Sheet

Because there are numerous participants and stakeholders in the project and ownership of the projected is a Special Purpose Entity, the ownership interest of the project sponsor or other project participant is a sufficiently minority subsidiary interest.

What are step in rights?

Step-in rights allow one party to take the place of another, such as a funder stepping in to the shoes of an insolvent developer to complete a project. Note that Practical Law’s collateral warranties and schedules of third party rights already include step-in rights in favour of a funder.

What are common term agreements?

a CTA containing the provisions which are common to all tranches of debt eg certain definitions, representations, undertakings and events of default, and. a facility agreement for each tranche of debt which: incorporates the common terms by reference to the CTA, and.

Who is a lender in project finance?

Project lenders provide most of the capital needed for project finance. Project lenders tend to be commercial banks, investment banks and even hedge funds. Regional development banks can also be project lenders.

What is project finance in construction?

Project finance is the funding (financing) of long-term infrastructure, industrial projects, and public services using a non-recourse or limited recourse financial structure. The debt and equity used to finance the project are paid back from the cash flow generated by the project.

What are the options for project financing?

Project finance may come from a variety of sources. The main sources include equity, debt and government grants. Financing from these alternative sources have important implications on project’s overall cost, cash flow, ultimate liability and claims to project incomes and assets.

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Which type of projects are suitable fit for project finance?

Appropriate project finance candidates include greenfield projects and significant facility or production expansions. These projects do not rely on the typical export finance security package, which provide lenders recourse to a foreign government, financial institution or an established corporation.