Glossary

The financial risks which could result from significant policy, legal, technology and market changes as we transition to a lower-carbon global economy and climate resilient future.

Refers generally to a contractual arrangement whereby an Offtaker (the “toller”) agrees to make payments to an SPV in return for the provision of services – e.g. refining of crude, power generation, regasification of LNG. The payments tend to be availability / capacity based and therefore such structures frequently transfer…

May be seen as a memorandum of understanding, setting out the terms and conditions of a financing which will in due course be incorporated into a full loan agreement. Term sheets may be “uncommitted” or “committed”. The former will normally be subject to: lender credit committee approval; formal loan documentation…

A financing facility, typically with a maturity greater than 3 years, with an agreed availability period (when the funds may be drawn) and a predetermined repayment schedule / arrangement. Amounts drawn under term loans may not be redrawn following repayment. Term loans are not typically repayable on demand. An Event…

Take or pay is a contractual provision, whereby one party has the obligation of either (i) taking delivery of the product, goods or service or (ii) paying a specified amount.  Take or pay contracts ensure a predictable level of revenues, since they are not dependent on demand and therefore will…

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.