1 Approaching Legal Issues in a Project Finance Transaction

Subject(s):

Lending and credit — Capital markets

Project finance is at its core a form of secured lending. It entails lenders extending a large amount of credit to a newly formed, thinly capitalized company whose principal assets at the time of closing are not physical but rather merely contracts, licences, and ambitious plans. There is a broad commonality of legal and commercial issues to be considered across virtually all projects, and the reliability of the approaches customarily used by project finance professionals in analysing those issues has been tested and proven through decades of complex transactions. How those methods are applied to individual transactions may vary, but the issues to be assessed remain consistent across industries, jurisdictions, and financial structures. This chapter considers both those methods and their application in specific contexts.