Direct Agreement Is

Project agreement: the main agreement for each PFI project, the project agreement governs the relationship, rights and obligations between the Authority and Projectco for the duration of the project. It can also be called a concession agreement. Equity investors: lenders or project proponents who do not expect to play an active role in the project. In the case of lenders, they will have an interest in in addition to the granting of loans as debt financing in order to obtain a higher return if the project is successful. In most cases, any equity investment is linked to an agreement allowing the equity investor to sell his shares in the project sponsor if the investor wishes to leave the project. Similarly, the sponsor of the project may have the opportunity to buy back the shares. Construction contract: Projectco will enter into the construction contract with the contractor under which Projectco`s construction obligations from the project contract will be transferred to the contractor. By Katie Liszka If direct agreements are used in project financing operations to protect lenders, the project should be in trouble. These are contractual mechanisms that allow lenders to follow in the footsteps of the project company (the borrower) and take over the project and/or find a replacement unit to continue the project. The parties to the direct agreement include the project company itself and the consideration for the project document for which the direct agreement is a security. ]] > There is generally no debate as to whether, in principle, a direct agreement should be reached. However, it is still common for certain provisions to be negotiated intensively and it often seems that disproportionate amounts of time are devoted to concentration on such a short agreement.

To my knowledge, no one has ever intervened as part of a direct agreement and there would be practical difficulties, such as the reallocation of all project contracts. However, direct agreements are a common practice and a standard part of a lender`s security package. 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.