15 Defaults and Workouts: Restructuring Project Financings

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This chapter discusses restructuring, which is defined as a transaction which results in some form of an adjustment to a project company’s capital structure, or the terms of its debt, which is intended to avoid a default and the subsequent failure of the business. In the context of project financing or a company operating a group of project assets, decisions taken relating to any restructuring can be driven by the strategic nature of the assets or the need to secure energy supply or the ongoing monetization of natural assets. Topics covered include restructuring protagonists (e.g. directors, financial creditors, sponsors, etc.); process (e.g. restructuring ‘trigger’, project finance covenants, impact of covenant ‘loosening’, etc.); and restructuring options (e.g. creditors’ rights under project finance documents, defaults during development/construction, defaults during operation, etc.).