A typical project finance term sheet

o Sculpted to fit revenue profile, subject to achieving the minimum base case DSCR.

The level of the lockup and default covenants will be determined with respect to the volatility of the cash flows and market standards for similar projects.

“Loan Life Cover Ratio” (“LLCR”) is the net present value of future CFADS (excluding cash) until the final scheduled maturity of a Facility (discounted at the weighted average of the forecast Facility interest rates projected in each period) to the total aggregate of loans outstanding under the Facility.

Notarial bonds over movable assets;

Mortgage bonds over immovable assets;

Security cession of all debtors balances and claims which the Borrower may have against third parties, security cession of Project Accounts (other than the Distributions Account) including Debt Service Reserve Account, cash balances and investments of the Borrower;

Security cession of all guarantees (including parent company guarantees) and performance bonds;

Cession over all licenses and permits;

Pledge over all shares in the Borrower; and

Lender satisfaction to the following:

The provisions of the EPC Contract, which as a minimum is usually a fixed priced turnkey contract;

That the guarantees and performance bonds provided by the EPC and O&M contractor/s are in place;

The audited base case financial model to achieve the minimum base case covenants levels;

Satisfactory External Legal Opinions, as required.

Annual reports on the operation of the Project and, prior to the Scheduled COD, quarterly reports on the construction and equipment supply progress of the Project;

Certificate of fulfilment of the Project completion tests), issued by the Lenders’ Technical Advisor (“LTA”);

Prior to the commencement of each financial year, a copy of the operating Project budget for the next 12 months;

Notice of any material loss or damage;

Notice of any material breach, variation or termination of, or right to terminate or material dispute under any of the Project Agreements

Details of material claims, litigation, arbitration or other similar proceedings commenced or threatened by a third party against the Borrower or any project party

Any events of default under the other Project Documents (offtake contract, EPC, O&M) but usually at a lower threshold than under the relevant Project Document;

Borrower infringes Assignment or Change in Control obligations;

Acts of Insolvency, also for guarantors;

Any breach of a material clause in the Finance Agreement;

Misrepresentation – linked to lists of [repeating] representations and undertakings which the Borrower must make;

Failure to meet a Ratio test and;

Cancel all remaining commitments;

Call all amounts due and payable under the Facility and accelerate their repayment;

Exercise any “step-in” rights that they might have, assuming control of the project;

Operating and maintenance expenditure, and project taxes;

Costs and fees under the Finance Documents;

[Sometimes scheduled Capex, but usually not];

Interest of the Loan and hedging counterparties to the Term Loan;

Capital in respect of the Loan and any crystalised hedge break amounts;

Any amount necessary into the DSRA and MMRA to require the maintenance of the required balances;

Payment of subordinated interest and principal; and

Upfront (arranging and underwriting) fees