The contractor and the planning team offer guarantees to the AUTHORITy and lenders. Lenders generally have the first right to enter into the construction contract in place of Projectco. All rights available to the Authority are generally subject to the rights of lenders. Direct agreement often involves changes to the underlying project documents. This is particularly the case for concession contracts in which the project company obtains the concession before the lenders make a strong commitment. Funding often follows the award of the concession and lenders may require changes to the risk allocation in the concession contract in order to make the project bankable. In addition to the agreement of the counterparty who does not have the right to terminate if it has the right to do so in accordance with the project document, it will also accept that the intervention process may be initiated by lenders who respond to a notification of failure of the project company under the facility agreement, since the guarantee or acceleration of the loan is assured. A direct agreement is an agreement that gives the project`s funders direct rights to some of the project`s important documents. These rights are explained in direct agreements in project financing operations – turnkey provisions. If necessary, a direct agreement may include clauses in which the consideration of the project document accepts the collection or transfer by the security of the rights of the project company, in accordance with the project document. The direct agreement of the lenders: this is a three-way agreement between the Authority, Projectco and the lenders, under which the Authority agrees to grant lenders a deadline for the early termination of the project agreement. This agreement will also provide lenders with the opportunity to intervene directly or through a candidate or representative to resolve the termination event or to find another party that is acceptable to the Authority to assume Projectco`s rights and obligations under the project agreement. Service Contracts: Projectco enters into service contracts with service providers and transmits to these contractors the service obligations imposed on them under the project agreement.
As noted above, service providers offer guarantees to the Authority and, in certain circumstances, the Authority has intervention rights, subject to the rights of lenders. With regard to the first PFI projects, it was customary to have separate agreements for different phases of the project, such as. B a development agreement for the design and construction phase and an agreement to operate or manage facilities for the operating phase. Today, however, it is more common to have a single project agreement covering all aspects of the project. For a project that is not yet built, one of the borrower`s most valuable assets will be his construction contract rights.