SOURCES OF FINANCING
Equity is riskier is debt, so rate of return for equity investor will be higher than rate of return for lender.
Subordinated Debt
senior debtors have primary rights. Once they get all their money, subordinated debt gets paid. Then equity gets paid.
Creature of contract, not statute
Contracts of the tools we use to define relative priority of different levels of debt
Contracts typically define “senior debt”
Crucial concepts
Definition of “senior debt”
What is meant by subordinated
Could be limited to liquidation, or could be any time there is payment default on senior debt, or could be any time there is covenant default
Export Credit Agency
Arm of govt that makes loans to borrowers in other countries in order to help them buy goods or services from its country.
Some provide project finance loans. Those that do are the agencies from countries of companies that provide things like turbines, construction contracts, power plants, telecom equipment, etc.
List of the information and the criteria that Ex Im Bank requires that the project company give them as part of application (page 641) includes:
Project Info
summary of all aspects of the project
copies of the actual agreements for key elements of the project
breakdown of anticipated project costs through commissioning
financing projections
market information
description of risks and benefits
types of insurance coverage
infrastructure required
Share with your friends: |
