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Steve Mills

Glossary
November 30, 2021

Participation Fee

A fee paid by the Mandated Lead Arranger(s) of a financing to other banks taking part in the transaction. This is a one-off payment, typically a flat percentage of the participant’s contribution to the loan (the participant’s “ticket”).
Steve Mills
Glossary
November 26, 2021

Open Book Contract

In an open-book contract, the buyer and seller of work/services agree on: a) which costs are remunerable; and b) the margin that the supplier can add to these costs. The project is then invoiced to the customer based on the actual costs incurred plus the agreed margin. It is essentially…
Steve Mills
Glossary
November 25, 2021

Offtake

The arrangements for the disposal / use of the goods or services to be produced by a project. Many projects have a formal offtake contract (e.g. a power purchase agreement) with a contractual Offtaker. Others have no formal offtake agreements – e.g. where a commodity (such as oil) is sold in…
Steve Mills
Glossary
November 24, 2021

Non-Recourse Loan

The difference between a Limited-Recourse Loan and a Non-Recourse Loan is really one of emphasis. The term Non-Recourse Loan tends to be used by Sponsors, who are thereby emphasising that once they have injected their base Equity there is no further obligation on them. Lenders tend to use the term “Limited-Recourse Loan” rather than “Non-Recourse…
Steve Mills
Glossary
November 23, 2021

Negative Pledge

A provision in a contract which prohibits a party to the contract from creating any security interests over certain property specified in the provision. Negative pledges often appear in project finance security documents, where they operate to prohibit the person who is granting the security interest from creating any other…
Steve Mills
Glossary
November 22, 2021

Multilateral Agency

An international organisation owned by three or more countries which exists to encourage the development of productive private enterprise through the provision of financing, guarantees and other support mechanisms. Examples are the International Finance Corporation (IFC) - a member of the World Bank Group -  the African Development Bank and…
Steve Mills
Glossary
November 17, 2021

Loss Payee Clause

A loss payee clause (or loss payable clause) is a clause in a contract of insurance that provides, in the event of payment being made under the policy in relation to the insured risk, that payment will be made to a third party rather than to the insured beneficiary of…
Steve Mills
Glossary
November 16, 2021

Loan Market Association (LMA)

The Loan Market Association (LMA) was formed in December 1996 and is based in London, UK. Its initial aim was to assist in the development of the secondary loan market in Europe, which was in its infancy at that time. Its intention was to develop industry best practice and standard…
Steve Mills