Repercussions of COVID-19 and project finance transactions.
Repercussions of COVID-19 and project finance transactions. The unexpected plunge in oil prices, school and business shutdowns and increased concern around the impact of COVID-19 (coronavirus), the need for project financiers and borrowers to consider the implications under their finance documents has become even more pressing. Within the spheres of a project finance transaction, the interruption of construction or operations can have significant implications. The project company is typically a thinly capitalized special purpose vehicle and lenders have limited or no recourse to sponsors in circumstances where the project is underperforming. In this note we consider some of the issues under the finance documents for typical project finance transactions. Is the borrower required to provide any information to the lenders? Most facility agreements contain information undertakings with which borrowers need to ensure they comply. The scope of the undertakings will vary across differe