Project finance—key finance documents
Project finance—key finance documents

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Project finance—key finance documents
  • Overview of the finance documents used in project finance transactions
  • Mandate letter/term sheet in a project finance transaction
  • Facility agreement or common terms agreement in a project finance transaction
  • Intercreditor agreement in a project finance transaction
  • Hedging documents in a project finance transaction
  • Security documents in a project finance transaction
  • Direct agreements in a project finance transaction
  • Accounts agreement in a project finance transaction

Documents for a typical project finance transaction can be split into three broad categories:

  1. finance documents—the finance documents govern the debt financing for the project including the senior debt and any related facilities (eg a cost overrun facility or other standby facility)

  2. project documents—the project documents are the contracts which underpin the project itself and they typically include the construction contract, the operation and maintenance contract and any supply and offtake contracts (see Project documents—overview), and

  3. shareholder or equity documents—the shareholder or equity documents govern the terms of the equity investment and the relationship between the investors in the project (see Practice Note: Equity support in project financing)

This Practice Note examines the first category of documents, the finance documents. It explains what they are and some of the key terms in them.

Overview of the finance documents used in project finance transactions

Many of the standard finance documents used in a straightforward syndicated transaction will also be required in a project finance transaction. Project financing is, after all, a form of syndicated lending (see Practice Note: Bilateral, syndicated and club arrangements).

Key finance documents include:

  1. a mandate letter or term sheet

  2. a facility agreement or common terms agreement

  3. an intercreditor agreement

  4. any hedging documentation (if applicable)

  5. security documents

  6. direct agreements, and

  7. accounts agreement(s)

Mandate letter/term sheet in a project finance transaction

At the beginning of a new

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