INTRODUCTION TO PROJECT/CONTRACT FINANCING
The project financing facilities provided by MDV are extended to companies or Special Purpose Vehicles that secured medium to long-term public or private technology infrastructure projects.
The project’s cashflows are secured as payments to the financing, together with the underlying assets, rights and other interests.
MDV contract financing facilities, uses a suite of financing instruments such as term loans, and revolving and trade facilities, are specifically tailored for specific requirements of an individual contract. The contract price, contract period and terms of payment should be set out and defined in the contract award.
Financing may include components of term or revolving financing to cover capital expenditures and working capital requirements. Trade facilities may be included for overseas payments and to cater for bank guarantees where necessary.
WHY MDV PROJECT OR CONTRACT FINANCING?
MAXIMISE LEVERAGE
Total funding to ensure project/contract completion and delivery
STRONGER CREDIT
Projects assessed on segregated and stand-alone basis
OPTIMISE EQUITY
Project or contract cashflows serves as primary payment source
PROFIT ONLY PERIOD
Principal payments may be deferred during project development period
PROJECT OR CONTRACT FINANCING COMPONENTS
There are several parties in a project financing depending on the type and the scale of a project. Generally, the parties to a project financing include project or contract sponsor, offtaker, main/sub-contractors or vendors, regulatory authority(ies), insurers, and consultants/subject matter experts.
A financial model is constructed as a tool to assess viability and facilitate credit assessment, outlining a comprehensive list of input assumptions. The model needs to be able to provide outputs that reflect the anticipated interaction between data and calculated values for a particular project, and capable of sensitivity analysis, i.e. calculating new outputs based on a range of data variations.
Assessments of total project costing and relevant supplier or vendors are key component of credit process to ensure viability of project.
Typical project finance documentation may include shareholder/sponsor documents, project documents, finance documents, and security documents.
TERM SHEET OR FACILITY AGREEMENT
A financing agreement between the project company and the financiers will govern this relationship. Basic terms will include General conditions precedent, disbursement conditions, Availability period, Drawdown mechanics, pricing/profit rate, payment schedule, Financial and general covenants such as restrictions on related party transactions, advances to promoters and dividends.
WHY MDV?
MDV’s products are similar to banks and venture capital companies but with several key differences to accommodate our customers’ varying needs in each stage of development.
Our extensive technology portfolio is what sets MDV apart from other financial institutions. The expertise that we have developed and the experience that we have accumulated through funding more than 700 technology projects have enabled us to better understand our clients and to rapidly respond to market needs.
We also work closely with our customers to provide them with utmost value throughout the financing tenure, where we will offer our support during challenging periods.
MDV’s products are similar to banks and venture capital companies but with several key differences to accommodate our customers’ varying needs in each stage of development.
