Steve Mills

An increased majority percentage requirement which is incorporated into a loan agreement for the approval of particular issues – usually those which are complex or contentious.

Subrogation is the right to “step into the shoes” of a third party (such as a creditor or an insurance company) and assume their right to collect a debt or damages. Subrogation is an equitable remedy, having first developed in the English Court of Chancery. It is a familiar feature…

An instrument (usually a debt or obligation) which ranks lower than / behind some other instrument in terms of interest payment, debt repayment, access to cashflow or access to security. If debt instruments are of equal rank they are “pari passu”.

A financial instrument (typically issued by a bank) which is issued for the benefit of a party to a contract, who can claim  payment under that instrument if, for whatever reason the beneficiary is not paid under that contract . The issuing bank must pay upon receipt of a completed…

The company which is established to construct, own and operate the project in question. The SPV will in almost all cases be the borrower of project loan facilities. NB – occasionally the SPV may be a limited partnership, but a limited company is the norm.

A contractual agreement for the sale to a buyer of physical goods or other assets – most often encountered in the project financing field in the context of LNG. SPAs are the usual method for the long-term sale of LNG and frequently incorporate take-or-pay provisions.

A form of financing facility where a Borrower who repays an amount borrowed under the facility will have the right to draw that amount again. Revolving credits contrast with Term Loans, which have a drawdown period and repayment period. Amounts repaid under a term loan structure are not available for…

A Control Account. The account which is opened in the name of the Borrower in the books of the agent bank for a transaction into which are paid the proceeds of sale of the project’s output. Also known as a Proceeds Account.

A form of surety provided by a contractor so as to avoid deductions (retentions) being made from the milestone payments under a construction contract. Thus rather than receiving 90% of a stage payment due to him when a milestone is passed (with the other 10% being payable at completion of…

A form of lending against petroleum reserves which uses some aspects of project finance structuring (notably discounted cashflow of Cashflow Available For Debt Service) but which: a) is not structured as a Term Loan; and b) is not specifically dedicated to the development of particular petroleum assets. RBL facilities are…