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Direct Agreement Project Finance

Project agreement: the main agreement for each PFI project, the project agreement governs the relationship, rights and obligations between the Authority and Projectco for the duration of the project. It can also be called a concession agreement. Project documents are contracts that define each party`s responsibilities for a project, and the success or failure of most projects often depends heavily on them. In addition, security packages for project financing often include the transfer of project documents by the borrower to the lender/security officer. The transfer of project documents usually takes the form of a sale in security debiti (security transfer) as opposed to a transfer to and from. In the context of a security transfer, the borrower cedes his individual rights to the lender or security officer with respect to the project documents, as a guarantee of his debt facility obligations. While the borrower retains ownership of the rights transferred, the lender/security officer has the right to assert these rights against the consideration of the project document in the event of a default under the facility agreement. Wouldn`t the end of the CPR contracting services extend the project`s completion time, given that a new CPR contractor is intended to replace the previous one? 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. 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. Project sponsor: the person who plays an active role in the management of the project. The project sponsor owns Projectco and obtains profits, either through Projectco`s ownership or through management contracts, if the project is successful. The proponent often has to cover certain project liabilities or risks through bonds or management or service contracts.

A direct agreement is an agreement that gives the project`s funders direct rights to some of the project`s important documents. These rights are explained in direct agreements in project financing operations – turnkey provisions. From an enforcement perspective, direct agreements grant lenders rights in the event of a breach of the project document, in order to prevent the counterparty from ending it if the borrower is unable to remedy such a breach, while a security assignment confers rights on lenders in the event of a default under the facility agreement. Although it has become a market practice, the proposed facilities agreements are such that the breach of a project document is a case of delay under the facility agreement, that the counterparties of the project file are not parties to the facility agreement and that, therefore, the agreements do not have a mechanism that prevents the counterparty from terminating the project document or refraining from providing that document. Direct agreements and security transfers allow lenders to have a direct relationship with counterparties, allowing them to facilitate the continuity of the project. Account Bank: An individual lender holds the accounts on which all the money generated by the project passes. If necessary, a direct agreement may include clauses in which the consideration of the project document accepts the collection or transfer by the security of the rights of the project company, in accordance with the project document.

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