The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
In a typical project finance transaction, the project company (ie the borrower) is a special purpose vehicle (SPV) set up specifically for the purposes of the project. This means that it does not have its own experienced employees and its only assets are the project assets.
The sponsor (which is traditionally an entity with more substantial corporate worth and skill) is often required to provide support to the project company to ensure that the project is successful.
Equity support for a project means any form of support provided by the sponsor to the project company.
The two main forms of equity support are:
non-financial equity support arising out of the sponsor's experience, knowledge and technical expertise, including by way of:
skilled personnel who are allocated to the project to oversee and manage its design and development
assistance to procure official licences, authorisations and approvals (particularly in the case of any local sponsor), and
assistance to procure equipment, raw materials and other supplies for the project, and
financial equity support
The focus of this Practice Note is on the second form of equity support—the financial aspects.
Sponsors are rarely able to obtain debt (eg from commercial banks) for 100% of
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