Pre-export finance—key terms in the facility agreement
Produced in partnership with Dentons

The following Banking & Finance practice note produced in partnership with Dentons provides comprehensive and up to date legal information covering:

  • Pre-export finance—key terms in the facility agreement
  • Drawdown and term
  • Provisions relating to production and regulation
  • Provisions relating to offtake contracts
  • Representations about the offtake contracts
  • Covenants about the offtake contracts
  • Force majeure
  • Information covenants
  • Regular reports
  • Insurance covenants
  • More...

Pre-export finance—key terms in the facility agreement

Pre-export finance (PXF) is an established structure used to provide finance to producers of goods and commodities (see Practice Note: Pre-export finance—structure, parties and risks). It is a type of trade finance.

In a classic PXF facility, funds will be advanced by a lender or syndicate of lenders to producers to assist them in meeting either their working capital needs (eg to cover the purchase of raw materials and costs associated with processing, storage and transport) or capital investment needs (eg investment in plant and machinery and other elements of infrastructure).

A typical PXF facility agreement will contain various provisions which focus on the ability of the borrower to produce a commodity or product and to generate income by exporting that commodity or product.

For information on what type of security lenders typically require in a PXF facility, see Practice Note: Pre-export finance–taking security.

Drawdown and term

PXF facilities are usually structured on a short to medium term basis, often from one to five years in tenor. The period of availability of the facility will be determined by the purpose for which the funding is required. For example, it is not unusual for a PXF facility agreement to include a term loan tranche, consisting of a drawing of a single amount which is amortised over the full period of the facility, combined

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