Project sponsor: the person who plays an active role in the management of the project. The project sponsor owns Projectco and obtains profits, either through Projectco`s ownership or through management contracts, if the project is successful. The proponent often has to cover certain project liabilities or risks through bonds or management or service contracts. If necessary, a direct agreement may include clauses in which the consideration of the project document accepts the collection or transfer by the security of the rights of the project company, in accordance with the project document. 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. Service Contracts: Projectco enters into service contracts with service providers and transmits to these contractors the service obligations imposed on them under the project agreement. As noted above, service providers offer guarantees to the Authority and, in certain circumstances, the Authority has intervention rights, subject to the rights of lenders. Partial contracts: Projectco has contracted several subcontractors to cushion the risks it takes under the project agreement. It is customary for Projectco not to perform any of the most important activities, but rather to be a vehicle for the design of project contracts – hence the term “assignment vehicle.” 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. This agreement will also provide lenders with the opportunity to intervene directly or through a candidate or representative to resolve the termination event or to find another party that is acceptable to the Authority to assume Projectco`s rights and obligations under the project agreement.
With regard to the first PFI projects, it was customary to have separate agreements for different phases of the project, such as. B a development agreement for the design and construction phase and an agreement to operate or manage facilities for the operating phase. Today, however, it is more common to have a single project agreement covering all aspects of the project. Financing agreements: The facility agreement is the main document between lenders and Projectco and contains the terms of project financing. Lenders will also need a security package and guarantees to protect borrowed funds. The loan agreement is discussed in more detail in our separate out-law guide on key issues for lenders in project financing contracts. The ability of lenders to terminate, during the specified period or after a failure under the facility agreement, the possibility of designating a company that will assume the rights and obligations of the project company in the project document; 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.