Andrew S. Rose
Attorney at Law
Contract Negotiation
Contracts for our clients can be as simple as an auto loan or as complex as a service agreement with a municipality to construct and operate a materials recovery facility. We doubt you need much help with the former but we believe we can assist with the latter. Mr. Rose has assisted many clients with the negotiation of such service agreements, as well as other significant contracts for waste collection, recycling and various agreements integral to non-recourse, “project finance” transactions including feedstock, EPC and output contracts.
Mr. Rose does not replace regular company counsel but instead has a long record of working with such counsel on a few aspects of such contracts where he has particular expertise including, perhaps most importantly, being sure the form of contract will be well received by the lenders. By focusing on the “financeability” of
major contracts, he can sometimes make the financing of a project feasible where such financing would otherwise be difficult to achieve or, at the very least, we can make the ultimate terms of financing much better and less expensive.
"Project Finance"
The goals in structuring a financing for a new waste, energy or similar facility are simple: First, be sure you and your project are creditworthy. Second, get the best possible terms by choosing the right financing structure.
Facilities are most commonly financed using the company’s general corporate credit. The “equity” for the project is provided by the company’s balance sheet and cash flow producing, in effect, 100% financing. In some cases, however, a company doesn’t want to impair its ability to borrow for “core” equipment and facility needs or the size of the project is larger than it could normally handle. If so, “Project” or “non-recourse” finance may prove beneficial where the lender looks only to the assets/cash flows of the “project” and the sole purpose corporate entity formed to develop and operate it.
The basic components are mainly contractual. That is, the project must have secure contracts for waste supply and residue as well as a secure market for any energy, recyclables, compost and/or other product produced. In addition, the project’s construction and ability to operate must be guaranteed by an engineering, procurement and construction (“EPC”) contractor with the financial wherewithal to support its guarantee. If true “project finance” cannot be arranged, we can sometimes negotiate a hybrid structure somewhere between project and corporate finance. We would be happy to provide information about negotiating these types of financing structures.