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Direct Agreement Construction

vendredi, avril 9, 2021

Agreements on government guarantees have emerged as an extension of the approach that underlies the direct agreement of lenders. Guarantee agreements are concluded between the Authority and the contractors who enter into a contract with Projectco. The objective is that if projectco does not meet its contractual obligations during the construction phase, the support of Projectco`s corresponding mission can guarantee the completion of the project. In addition, the Authority may take over Projectco`s operating contract at the end of the project. 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. Direct agreements generally contain provisions on the following issues: direct agreements are generally referred to as « tripartite agreements, » reflecting the fact that this is an agreement between three parties, i.e. a direct agreement may, if necessary, include clauses in which the counterparty to the project document accepts the collection or transfer through the security of the project company`s rights. , in accordance with the project document. 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.

For a project that is not yet built, one of the borrower`s most valuable assets will be his construction contract rights. Once the project is fully completed, project documents of significant value generally include the operating and maintenance contract as well as all delivery and start-up contracts. In addition to the agreement of the counterparty who does not have the right to terminate if it has the right to do so in accordance with the project document, it will also accept that the intervention process may be initiated by lenders who respond to a notification of failure of the project company under the facility agreement, since the guarantee or acceleration of the loan is assured. Direct agreement often involves changes to the underlying project documents. This is particularly the case for concession contracts in which the project company obtains the concession before the lenders make a strong commitment.


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