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FEUI 2022 - HRB International - Financing Law Aspects - NSS
FEUI 2022 - HRB International - Financing Law Aspects - NSS
Financing
Financing vs Equity
Financing / Loans:
• bank debt
• senior debt Equity:
• mezzanine debt • shares
• high yield bonds
• shareholders loan
What is financing for?
Senior debt
Security (Hak Jaminan) & Guarantees
(Penjaminan)
• Share
security
Lenders Maximise security • asset
security
• guarantees
• minimum
restrictions
• minimum costs
Borrowers Limit security • minimum post-
closing
obligations
(registration,
regular
valuation)
2
Documentation:
Term Sheets &
Facility Agreements
Documentation
Security Corporate 6
documents Approvals
Facility Agreements
Parties in a Facility Agreement
* Lenders / * Borrower /
Creditors Debtor
(banks, financial (individual,
institutions) corporates)
Costs/expenses
relating to Financing Term Facility
Refinancing of existing
indebtedness of the Target Term Facility
◼ Voluntary Prepayments
3
Pledge – Fiducia
over shares; security –
bank over movable
accounts assets
Hak
Tanggungan Hypothec
– over – over
immovable vessels
assets
Security Right - Pledge
over movable
assets; tangible /
intangible; over
immovable assets *the assets remains
which are not in the possession
capable of of the fiducia
encumbered by security grantor
way of Hak
Tanggungan or
Hypothec
Security Right – Fiducia Security
Fiducia Security
Agreement (Notarial
deed; Indonesian
language) Registered with
Fiducia Registration
Office (in the domicile
of the grantor); fiducia
security certificate
Security Right – Hak Tanggungan
Law No. 4 of 1996 regarding Hak Tanggungan
Project Financing
What is Project Financing?
Lenders Collateral
Debt
repayment
Limited
Specific recourse
economic
unit
Government Sponsors
Cash Assets
Non
recourse
POWER
Infrastructure
TRANSPORT
What is Project Financing?
very rare
Non-recourse Creditors have no recourse to the
sponsors for anything
more common
Sponsors can be required to give
Limited recourse cost-overrun support, completion
guarantees
“Cash is King”
Cash flow – super important for
the project and the economics
of the projects
Limited recourse means only source of revenue and
repayment is the Project’s cash flow
– Borrower often does not own real estate/assets
– Lenders will need a lot of information about cash flows
Shareholder Shareholder
Host
Government
Direct
Agmnt Concession
Construction Agreement
Contract
Project Purchase
Contract
Contractor
Company Power
O&M Purchaser/
Agreement Off-taker
Supply
Contract
Direct Agreement
Operator Direct
Gas Supplier Agreement
6
Case Example
Case example: IPP Power Project
tariffs
Sponsors Shareholders PLN Consumers
Agt
Share
PPA & GOI Support
Mortgage Direct Ministry of
Sponsors Agt Letter/Guarantee??
Agt Agreement
Finance
Loan
Project Agt Project Company
Lenders Security Insurance Insurers
Documents Policy
Direct O&M
Agreement Agreement Operator
Construction
Contract
EPC
Direct Contractor
Agreement
Direct Coal Supplier Coal Supply
Agreement Agreement
Case example: IPP Power Project
7
Security Structure
Project Finance Security Structure