Direct Agreement What Is

The direct agreement of the lenders: this is a three-way agreement between the Authority, Projectco and the lenders, under which the Authority agrees to grant lenders a deadline for the early termination of the project agreement. This agreement will also provide lenders with the opportunity to intervene directly or through a candidate or representative to resolve the termination event or to find another party that is acceptable to the Authority to assume Projectco`s rights and obligations under the project agreement. Financing agreements: The facility agreement is the main document between lenders and Projectco and contains the terms of project financing. Lenders will also need a security package and guarantees to protect borrowed funds. The loan agreement is discussed in more detail in our separate out-law guide on key issues for lenders in project financing contracts. Direct agreement often involves changes to the underlying project documents. This is particularly the case for concession contracts in which the project company obtains the concession before the lenders make a strong commitment. Funding often follows the award of the concession and lenders may require changes to the risk allocation in the concession contract in order to make the project bankable. With regard to the first PFI projects, it was customary to have separate agreements for different phases of the project, such as.

B a development agreement for the design and construction phase and an agreement to operate or manage facilities for the operating phase. Today, however, it is more common to have a single project agreement covering all aspects of the project. The ability of lenders to terminate, during the specified period or after a failure under the facility agreement, the possibility of designating a company that will assume the rights and obligations of the project company in the project document; 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. In addition to this guarantee, project lenders generally expect direct contractual relationships with counterparties with key project documents. This goal is achieved through direct agreements. Agreements on government guarantees have emerged as an extension of the approach that underlies the direct agreement of lenders.