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This chapter examines some of the myriad types of financial support given to a project by its sponsors and the way that support is provided. It also considers the types of assets over which security is taken to ensure that the senior lenders’ claims against the project are indeed senior to the claims of the sponsors; the contractual documentation between the senior lenders and the counterparties to the principal commercial contracts in relation to the project which (should things go wrong) allow the senior lenders to ‘step into’ the project company’s contractual shoes and thereby take control of the project in order to protect their commercial interests; and the way in which formal legal opinions are used in relation to a project financing as a means of confirming the extent to which the contractual arrangements for the project operate as the different parties and groups of parties intend.

This chapter begins with a discussion of various financial and other varieties of sponsor support which may be provided to a project, including, among other things, shareholder loans, contractual undertakings intended to mitigate completion risk, and ongoing sponsor commitments, post-completion. It provides an overview of security arrangements, considering particular issues that may arise in foreign jurisdictions or in light of the types of asset being secured, and examines how lenders are afforded ‘step-in’ rights in relation to key project contracts through direct agreements. Finally, the chapter discusses legal opinions and their purpose, with particular focus on issues in relation to those where a project is one of the first of its kind in a particular country.

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.

This chapter considers a number of the more significant documentary issues commonly encountered in relation to the core financing documents for a project. It provides an overview of the ways in which multiple tranches of debt provided by different lenders and lending groups are made available to a project and includes an analysis of various clauses found in the principal financing documents, with particular focus on financial covenants and the ways in which lenders seek to regulate the project company’s cashflows. The chapter also discusses a number of the key intercreditor issues that arise in the context of multi-sourced financings and looks specifically at the following agreements which commonly form part of the contractual matrix for a project financing: credit agreements, common terms agreements, accounts agreements, intercreditor agreements, ECA facility agreements, mezzanine facility agreements, and equity bridge facility agreements.