Project Finance Loan Agreement for the United Kingdom

Project Finance Loan Agreement Template for England and Wales

A Project Finance Loan Agreement under English and Welsh law is a comprehensive financing document that establishes the terms and conditions for providing long-term financing to a specific project. It details the loan facility, security package, representations and warranties, covenants, and events of default. The agreement is structured to ensure that the project's revenue streams serve as the primary source of loan repayment, with limited recourse to the project sponsors.

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What is a Project Finance Loan Agreement?

A Project Finance Loan Agreement is utilized when financing large-scale infrastructure, energy, or other capital-intensive projects where the loan is primarily secured by the project's assets and cash flows. This agreement, governed by English and Welsh law, provides a comprehensive framework for the financing arrangement, including detailed provisions for risk allocation, security arrangements, and project oversight. It is particularly suited for complex projects involving multiple stakeholders where traditional corporate financing may not be appropriate or available.

What sections should be included in a Project Finance Loan Agreement?

1. Parties: Identification and details of all contracting parties including lenders, borrowers, sponsors, and security providers

2. Background: Context of the project and financing arrangement, including project description and purpose of the facility

3. Definitions: Comprehensive list of defined terms used throughout the agreement

4. Facility: Details of the loan facility, including amount, purpose, availability period, and repayment terms

5. Conditions Precedent: Conditions that must be satisfied before drawdown, including documentation, permits, and other requirements

6. Representations and Warranties: Statements of fact and assurances from borrower regarding legal status, authority, and project viability

7. Covenants: Positive and negative obligations of the borrower, including financial covenants and project-specific requirements

8. Events of Default: Circumstances triggering default and associated remedies available to lenders

9. Security: Details of security package, including assets charged and enforcement mechanisms

What sections are optional to include in a Project Finance Loan Agreement?

1. Intercreditor Provisions: Provisions governing relationships between multiple lenders, including voting rights and payment waterfall

2. Step-In Rights: Provisions allowing lenders to take control of project in specific circumstances

3. Political Risk Protection: Provisions addressing political risk, including change in law and force majeure events

4. Environmental and Social Requirements: Specific provisions relating to environmental and social compliance standards

5. Insurance Requirements: Detailed insurance obligations and requirements for the project

What schedules should be included in a Project Finance Loan Agreement?

1. Form of Drawdown Request: Standard form for requesting loan disbursements

2. Form of Transfer Certificate: Template documentation for transferring loan participations

3. Project Documents: List and copies of key project contracts and agreements

4. Security Documents: Forms of security documents and guarantees

5. Financial Model: Agreed form of project financial projections and assumptions

6. Construction Schedule: Detailed timeline for project completion milestones

7. Insurance Schedule: Detailed requirements for project insurance coverage

8. Environmental and Social Action Plan: Detailed requirements for environmental and social compliance

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Financial Services and Markets Act 2000: Core legislation regulating financial services and markets in the UK, including requirements for authorized lenders, financial promotion rules, and regulatory framework

Consumer Credit Act 1974: Legislation governing consumer credit arrangements, including disclosure requirements and unfair relationship provisions, if any consumer elements are involved

Law of Property Act 1925: Fundamental property law legislation relevant for security arrangements, mortgage provisions, and property rights

Companies Act 2006: Primary legislation governing company law, including corporate borrower requirements, registration of charges, and directors' duties

FCA Regulations: Financial Conduct Authority regulations covering conduct of business rules, capital requirements, and risk management

PRA Requirements: Prudential Regulation Authority requirements covering banking regulations, capital adequacy, and risk assessment

Environmental Protection Act 1990: Key environmental legislation governing environmental protection and liability

Climate Change Act 2008: Framework for reducing greenhouse gas emissions and addressing climate change impacts in projects

Town and Country Planning Act 1990: Principal planning legislation governing development and land use

Money Laundering Regulations 2017: Regulations requiring due diligence and reporting obligations for financial transactions

Corporation Tax Act 2010: Primary legislation governing corporate taxation relevant to project finance structures

Insolvency Act 1986: Legislation governing insolvency procedures, security enforcement, and creditor priority

European Union (Withdrawal) Act 2018: Legislation governing the incorporation of EU law into UK law post-Brexit and its implications

Common Law Contract Principles: Fundamental principles of contract law including formation, enforcement, and remedies under English common law

Employment Law Framework: Various employment-related legislation that may affect project workforce considerations

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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