Construction Funding Agreement Meaning

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During the construction phase, funds are recovered and the need to repay the debts is deferred, either by taking interest into account until the revenues are collected during the operating phase, or by allowing Projectco to use additional funds to finance these interest payments. The availability period for subscriptions under the credit contract expires once the project is completed and becomes fully operational. The proceeds of financing contracts are similar to capital guarantee funds or guaranteed investment contracts, both instruments also promising a fixed rate of return at low or no risk for the investor. In other words, guarantee funds can generally be invested without risk of loss and are generally considered risk-free. However, like certificates of deposit or pension certificates, financing agreements generally offer only modest returns. Many provisions of a project financing agreement are similar to those in a regular loan agreement, and those listed below are of particular importance. Many provisions of the credit contract for a project financing initiative (PFI) financing agreement are similar to those of a conventional syndicated loan contract. The following provisions are of particular importance: the purpose of these funds is carefully documented in the credit contract to ensure that their use is limited to their use. This involves channeled payments or drawdowns via special project accounts, which can only be made for specific purposes. These payments may include: It is customary for the credit contract to provide several facilities or loans, such as.

B: these conditions will be extended and subdivided into two categories: the conditions that will preside over the establishment of the facility agreement and the terms of the precedent for each underwriting of each loan facility. These conditions may include that the credit contract generally recognizes two different phases in PFI projects: the construction phase and the operating phase. The terms of repayment of construction finance agreements indicate when and how the money should be repaid.

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