Cash Deficiency Support Agreement

The support of sponsors is useful to save the project company if, despite the banking institutions, it does not have the means to pay the construction costs and related expenses. Heaven is the limit of the sponsor`s liability in this regard. In other words, banks expect the sponsor to have deep enough pockets for all eventualities. An obligation that should normally be taken into account in the financing of projects, under which the promoter agrees to provide additional funds to cover possible cash shortfalls. Used to ensure that there are sufficient resources to cover the fixed royalties of the project. PBTR, began its commercial operation in December 2018 with a length of 39.2 km that crosses three regencies in Central Java, namely Pemalang, Pekalongan and Batang. As part of Trans Java Toll Road, the PBTR project aims to reduce Pantura traffic congestion, accelerate the supply chain and support tourism development, especially in Central Java. From: Cash Deficiency Agreement in The Handbook of International Financial Terms “ To fulfill its purpose, the money raised by the sponsorship should be paid directly to the project company to cover its expenses and complete the construction. In reality, lenders prefer the money to be directed to a debt service reserve account of the project company, opened at the bank and controlled by it, so that the bank can debit the sums due. Clearly, banks say that if the borrower of the project company does not have enough cash to repay the loan and interest at any time during the term of the loan – say five to seven years, even during the operating term, well after the end of the project – the sponsor must stand up and help make the payment. In fact, if the borrower does not pay, it is the sponsor who must pay. Lord. Herwidiakto, Senior Director of Waskita Toll Road (WTR), which owns 60% of PBTR, expressed his appreciation for the IIF as follows: „As waskita Toll Road has been tasked with accelerating infrastructure development in Indonesia by developing national strategic toll projects, the defective cash flow support offered by the IIF will support PBTR pending increased traffic.“ M.

Herwidiakto added that Waskita Toll Road currently owns and operates 18 toll road projects with a length of more than 1,000 km, and hopes IIF will be able to provide cdS similar to those of other WTR projects, many of which have recently started operating commercially. Within the oil and gas industry, debit contracts can often contain elements of debit and default agreements in order to facilitate indirect financing alternatives….

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