Project Financing

The high capital costs of an algae biofuels project mean that the project likely will require some form of substantial debt financing or joint venture financing to support the design, engineering, procurement, construction, and initial operations.  Before committing funds to a project, financial institutions and potential investors may demand to review and comment on a project’s design and engineering, procurement, process engineering, licenses, construction agreements, operations and maintenance agreements, and warranties.  For example, lenders and investors want to be able to enter into the project if the project developer (as the borrower) defaults and will be interested in provisions specifying the extent and nature of available damages in the event of a contractor’s subpar performance.

Because of the involvement of investors and lenders and to avoid issues arising from any potential inconsistencies, the project developer should be prepared to present a consistent and complete set of project agreements to lenders and investors and should be prepared for the possibility that lenders and investors may demand substantial changes in the negotiated documents.

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