January 11, 2022
Transition Risks
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.
January 8, 2022
Tolling
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…
December 31, 2021
Term Sheet
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…
December 30, 2021
Term Loan
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…
December 29, 2021
Take or Pay
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…
December 28, 2021
Super Majority
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.
December 27, 2021
Subrogation
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…
December 24, 2021
Subordinated
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”.
December 23, 2021
Standby Letter of Credit
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…
December 22, 2021
Single-Purpose Vehicle (SPV)
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.