Project Financing Agreement Template for Saudi Arabia

The Project Financing Agreement is a crucial document used in Saudi Arabia for structuring complex, large-scale project financings in compliance with both Shariah principles and Saudi regulations. It is typically employed when significant capital investment is required for major infrastructure, industrial, or development projects where the financing is primarily secured by the project's assets and cash flows. The agreement comprehensively addresses all aspects of the financing arrangement, including the Islamic financing structure used (such as Murabaha, Ijara, or Istisna'a), security package, disbursement conditions, project implementation requirements, and ongoing operational obligations. This document type is essential for projects requiring long-term financing in Saudi Arabia and must incorporate local content requirements, SAMA regulations, and relevant Royal Decrees while ensuring Shariah compliance throughout the structure.

1. Parties: Identification of the finance parties, project company, sponsors, and any guarantors

2. Background: Description of the project, purpose of financing, and key commercial arrangements

3. Definitions and Interpretation: Comprehensive definitions of terms used and rules of interpretation

4. Facility and Purpose: Details of the financing facility, amounts, and permitted uses

5. Islamic Finance Structure: Specific Shariah-compliant financing structure being used (e.g., Murabaha, Ijara, Istisna'a)

6. Conditions Precedent: Conditions to be satisfied before drawdown of facilities

7. Disbursement Procedures: Mechanisms and requirements for drawing down the facility

8. Repayment and Prepayment: Terms of repayment, including scheduled payments and early repayment provisions

9. Profit Rate and Fees: Shariah-compliant profit rate structure and applicable fees

10. Security Package: Details of security arrangements and guarantees

11. Representations and Warranties: Standard and project-specific representations and warranties

12. Covenants: Positive, negative, and financial covenants

13. Project Undertakings: Specific undertakings related to project construction and operation

14. Events of Default: Circumstances constituting default and consequences

15. Agency Provisions: Roles and responsibilities of facility agent and security agent

16. Payment Mechanics: Technical provisions regarding payments and accounts

17. Changes to Parties: Transfer and assignment provisions

18. Governing Law and Jurisdiction: Saudi law as governing law and dispute resolution mechanisms

19. Notices: Communication procedures between parties

20. Counterparts: Execution formalities