7 Principal Loan Finance Documentation

Subject(s):

Credit — Capital markets

Project financing will generate volumes of documentation. The financing arrangements between the project company (i.e. the borrower) and the lenders will be recorded in a suite of bespoke documents tailored to the needs of the particular transaction and its various stakeholders. Needless to say, the complexities of the projects themselves, coupled with the differing interests and objectives of the participants, make the exercise of documenting the contractual arrangements anything but straightforward, with the result that it is difficult and time-consuming to ensure that there are no ‘holes’ in the contractual arrangements arising from things being overlooked (or, more likely, not fully developed). This chapter analyses the core finance documents typically encountered in project financing and a selection of the key documentation issues that most often arise in practice. It covers credit agreements, account agreements, mezzanine facility agreements, equity bridge facility agreements, and intercreditor agreements.