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Consultations on project financing
1. Overview

Project financing obtains funding with limited recourse or without recourse by mortgaging the assets, expected returns or equity interests of a specific project. Unlike conventional financing, project financing is designed to ensure that the primary source of loan repayment is limited to the extent of the economic viability of the financed project, which builds on the project’s future net cash flows used for repayment and its asset value.

Apart from investing sufficient capital as scheduled, stakeholders do not provide extra credit support for the project and no third party offers credit. Operating under a more complex structure than conventional financing models, project financing requires all the parties involved to diversify risks and share the proceeds from the project through a series of contracts, agreements and arrangements.

2. Target customers

This financing model is suitable for projects that require huge funding, with high risk can yield a stable cash flow, and exceed the power of conventional financing models. These projects include the development of natural resources such as natural gas, coal, and oil, and large construction projects in the transportation, electric power, agriculture, forestry, electronics and public utility sectors.

3. Service description

CMB offers the following services as the financial advisor for a project:

Drafting a Project Financing Proposal to build a cash flow forecast model, assess the project’s economic viability and debt-payment ability, and advise on the financing framework;

Drafting the MOU on Project Financing, launching a market test and financing roadshow, negotiating major financing terms with interested financial institutions and rapidly revising financing structure and terms;

Sending a Letter of Invitation for Financing and a List of Financing Terms to prompt financial institutions to review the financial project;

Reviewing or drafting core documents relating to project financing such as the General Contract for the Project, Agreement on the Supply of Raw Materials and Agreement on Long-Term Supply;

Participating in financing negotiations, drafting financing documents, and pushing for the signing of a financing contract;

Supervising project progress managing and controlling project-related loans and some cash flows according to the financing documents after a financing contract is signed.

4. CMB's advantages

CMB’s experienced and professional team is able to offer specialist financing services that match your requirements.

CMB offers integrated financing services to help you implement your financing plans;

CMB’s strong customer base facilitates the implementation of your financing plans.

All the contents stated above are for your reference only. Please consult the local branch of China Merchants Bank for further information. China Merchants Bank reserves the ultimate right of interpretation for the contents in this page.