Rules for negotiating project finance deals

Author: | Published: 1 Dec 2005

Project finance is difficult to define but easy to recognize; it generally involves lending significant amounts of money to a thinly capitalized company whose primary assets consist of contracts and licenses, but that is where the simplicity ends. Notwithstanding the efforts of various governments to standardize private finance initiative (PFI) and similar documentation, the field defies the application of fixed rules. The range of assets financed, from underground mines to overhead cables, and the breadth of jurisdictions covered, from Canada to Mozambique, mean that even the most basic rules must flex to meet the facts and issues in question. In the absence of rigid market standards and agreed form documents, the project finance lawyer must patiently assess the economic, technical, political and legal risks presented by each project and draw on experience to help the parties reach a workable consensus in face of often unique challenges.

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