From Principles of Project Finance
13.8 FINANCIAL CLOSE CONDITIONS PRECEDENT
Signature of the financing documentation alone does not mean that the lenders will start advancing funds to the Project Company. In order to draw down any debt at all, the project must first reach Financial Close. This is the date at which all Project Contracts and financing documentation have been signed, and the conditions precedent to the effectiveness of the lenders' commitments have been satisfied or waived. The conditions precedent are effectively a checklist of documents the lenders require as the basis for their financing; when these are provided the lenders are obliged to advance funds. (This does not mean that lenders have no obligations before that date; for example, if the financing documentation requires the lenders to keep information about the project confidential, this is effective on signing.)
The list of conditions precedent documentation for a project finance can be of immense length, often running into several hundred documents and certificates. Typical requirements by lenders (all of which must be satisfactory to them in form and content) include:
Corporate documentation, board resolutions, etc., for the Project Company
Similar corporate documentation for any other parties to Project Contracts or financing documentation, and providers of guarantees, bonding, or other security
Signed copies of the Shareholder Agreement(s) relating to the Project Company (cf. 4.5.2)
Evidence of title to (or right to use) the project site
Signed copies of all the Project Contracts and evidence that all their conditions precedent have been fulfilled and that they are in full force and...
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