Sales Completion:

The Project has reached Physical Completion and has delivered product or generated revenues in satisfaction of a Sales Completion Test.

SEC:

Securities & Exchange Commission which regulates disclosure and practices for companies and public issues of debt and equity in the USA.

Security:

A legal right of access to value through mortgages, contracts, cash accounts, guarantees, insurances, pledges, or cash flow including licences, concessions and other Assets. A Negotiable certificate evidencing a debt or equity obligation/shareholding.

Securitisation:

Packaging up a stream of receivables or assets to fund via a capital markets, tradeable funding.

Senior:

Ranking for repayment, security, or action. Most Project Financings are Senior debt obligations with first, Senior Security.

Sensitivity:

A change to a cashflow input to determine the change to DSCR.

setoff:

Money held on behalf of a borrower may be applied to repay the loan. It usually implies without the permission of the borrower.

Shareholders’ Equity:

Net worth. Book value of Total Assets less Total Liabilities.

Short-term :

Up to 12 months

sinking fund:

A regular payment is set aside in anticipation of a future payment.

SOE:

State-owned Enterprise

Sovereign risk:

The government’s part of Political risk.

Sponsor:

A party wishing to develop a Project. A developer. A party providing financial support.

Steam turbine:

Electricity generation from steam pressure.

Structure:

How a Project Financing is drawn down, repaid, and collateralised / secured.

Subordinated:

The subordinated party accepts a lower priority of repayment and/or security than senior debt.

sunk costs:

capital already spent.

Supplier Credit:

The supplier of goods or services agrees to deferred repayment terms.

Supply risk:

The raw materials or input to a project change from those assumed/projected. For a resources production project, this is called reserves risk.

Swap:

An exchange of the basis of obligations to repay principal, interest, or currency. For interest-rate swaps (floating to fixed), the underlying principal may not be exchanged.

Sweep:

All available cashflow is used for Debt Service.

Syndication:

The selling of a Project Finance to a group of prospective Participants, the Syndicate.

tail:

The remaining reserves after the Project Financing has been repaid. Sometimes means the Residual.

take-and-pay:

If the project’s output is deliverable and can be taken, it will be paid for.

take-or-pay:

In the event the project’s output is not taken, payment must be made whether or not the output is deliverable.

takeout:

A financing to refinance or take out another eg construction loan.

tenor:

The number of years a loan is outstanding. The term.

term:

The loan life or tenor; the period to a loan’s maturity. Generic: A condition attached.

Throughput:

A Throughput Agreement is a hell-or-high-water contract to put and pay for material through a facility. Force majeure gives no relief.

Tolling:

A contract to process or convert a raw material into a saleable or finished product. The tolling contract does not require the purchase of the raw material or the sale of the output.

tombstone:

An advertisement listing the sponsor, amount funded, participants, and key roles.

tranche:

A separate portion of a Project Financing, perhaps with different financiers, Margins, and term.

Transfer Risk:

Currency cannot be sent out of the country, usually due to Central bank restrictions or a national debt rescheduling.

Trustee:

An independent or nominated third party who administers corporate or financial arrangements.

Turnkey:

The construction of a project to meet a standard or the Completion Test where it is ready to produce cashflow. Turnkey contracts usually have LDs and Retentions.

underwriting:

The commitment to fund is not contingent on Syndication.

Unsecured:

The financier has no Security, merely the obligation/undertaking to repay.

Unwind:

To reverse a swap or hedge.

WACC:

Weighted Average Cost of Capital calculated from the returns on Interest Rates payable on the different components of a company’s or a project’s deemed capital structure.

well:

A drill hole in the petroleum industry.

withholding:

A tax on interest, royalty, or dividend payments, usually those paid overseas. It may be deducted at source.

working capital:

Cash required to fund inventories and accounts receivable. Accounting definition is Current Assets less Current Liabilities. It is recovered entirely when the project ceases.

workout:

The project financiers are responding to work out a potential problem or have arranged to take over the operation after a Default to attempt to rehabilitate the cashflow generating capacity of the project.

World Bank:

An MLA based in Washington DC. The International Bank for Reconstruction and Development. Usually involved in government-related deals.

Yield:

The financial return, usually expressed as a percentage p.a.

Zero Coupon:

No interest is paid. A bond or note is issued at a discount which is calculated to yield a compound interest equivalent return.