F u n d i n g ´ s s u p p o r t t o t h e l o n g - t e r m i n v e s t m e n t p ro j e c t

Funding Programmes to support long-term investment projects from U$D 30 million and up, which can
be structured with repayments from minimum 10 to 30 years.

Usually, this type of long-term term project is based on a non-recourse or limited recourse financial
structure, in which project debt and equity used to finance the project are paid back from the cash flow
generated by the project.

There are several formulas to structure the funding, and back its repayment, in this case, it will
consider through a DPLC mechanism. The DPLC´s purpose is to reduce the aggregate cost of funding Page | 1
on long term financial needs of the project. Usually, it´s a good option for project funding whose
ROI “Return on Investment “does not start in early-phase of the project, such the case of
infrastructure project which implies a construction defined period, where there are not possible revenues.

This nature of funding is also called structured finance. In structure financial solutions helps project
funding through transfer of risk by way of collateralizing & securitization of credit facilities.

The loan should be established in corporation with the project owners local bank. In this case, a UAE
bank within the 20-top ranking banks.

Once the terms and condition of the loan have been negotiated and covenanted between and by the Funds
and the project´s owner, such negotiation shall have conveyed to the appointed local bank by the Client.

The Funds cannot lend the money directly to the Client, but through the local bank, that has been
appointed by the client

The local bank shall take the loan, on behalf of the Client, and extends a "DPLC" (Direct Payment Letter
of Credit) to the SNF that will cover the negotiated and agreed repayments, not the full amount. The
DPLC is issued as a revolving, irrevocable and confirmed letter of credit (as a guidance, such cost may
round about 0.8 – 1.8 % depending the project, local bank, project risks, etc.) and it shall pay once.

Once the DPLC has been confirmed by the local bank´, and issue to Funds, the funds will be released on
the banking account of the client. The DPLC is renewed every 13 months, but won´t imply aforesaid fee,
but a renewal much lower

The local bank in turn will take a collateral in the project owner assets and signs a fixed and/ or floating
charge agreement over the assets.

It should the project default, the bank continues the payments and recuperate the exposure by liquidating
the assets. It can design the repayment with 3 to 5-years grace period, as interest only and principal at
maturity or combinations-there-off-with-capital-plus-interest-payments.

What would be the Interest Rate?

The Interest Rate is subject to credit rating of the local bank, the country and the USA corresponding
bank. Once it has a copy of the Letter of Intent from the local bank, issued to their client, confirming they
accept the client assets, the project and the DPLC funding system, it can design and set the interest rate
for the country and project in question, which is subject to project, country, and-bank-credit-ratings.

As a guidance, and considering the high-rating country, such rate may range between 1.8 to 2.8 %
Can the Funds be done directly with the company, pledging the assets directly?

No the DPLC has to be issued by the local bank, and be confirmed by a USA corresponding Bank.

The DPLC issued by the bank will hold the same credit rating. Furthermore, no borrowers want to pay for
expensive due diligences, unless there is a guaranty that they will get funded.

Local banks know the market, know the clients, the local economy and will control the banking around
the project. Thus they are perfectly suited to receive the capital and distribute it towards to project and Page | 2
manage the assets.

The program is typically used for large infrastructure projects like ports, roads, buildings, bridges,
airports, or refineries, smelters, mining projects, oil terminals, natural gas projects, large bulk carriers, oil
carriers, commercial planes and large water and waste water treatment plants, or sewerage systems, power
plants, dairy plants, real-estate, hotels, etc.

The DP stands for Direct Payment, which means the loan is on the banks’ balance sheet.

DPLC is issued by the bank on the banks accounts, and the bank takes collaterals in the owner’ assets

Example, it is just a guidance, real value depends on the project, client and bank rating

Total Amount: USD 100,000,000

Loan Duration: 30.00 Years.
Indicative Interest Rate: 1.8 – 2.8 %
Grace Period: 5.00 years
Payments of interest plus capital: 5 years
Professional Fees: 1 %, upon receiving the capital.
Upfront payments: None
Additional grace period funding: it may be negotiated
depending project risk, client, etc. escrowed by issuing
bank, for paying interest of underlying instrument during grace period).

Cost of establishing the loan & process when closing?

There are no upfront fees associated with establishing the loan, once the bank receives the capital in their
bank accounts. Typically, the local bank signs the contract Term Sheet with the Lender.

The local bank then issues the DPLC according to the contract Term Sheet. The Funds then deposits the
capital in one-shoot with the local bank at the Client banking account. There are no other associated fees.
 Finance Consulting Service, within Funds structure, would provide a service to make smooth the
collateral structuring for the Client, and are capable to negotiate a much better conditions than the offered
one by the local banks to Client due to NSF high negotiating capacity, not only in term of bank interest
rate, but also in term of insurance that may be demanded by the banks in connection to infrastructure
construction and commissioning. Such aforesaid service is an option to keep in mind to reduce cost, time
and become easy compulsory procedures.

Simplified process chart

Page | 3
Project´s
Owner
It shall release the fund on
applies for U$D 100 Client bank account
million for his
(2) Financial
project
Financial
Consulting
(3) Consulting Prepares the negotiated
If Parties agrees, a pre-agreement
proposal to the Project
conditions shall be signed between
owner
and by the 3-parties It shall release the fund on 1
1 Client bank account

1
Funds Financial Local Bank, negotiate and
Consulting agree the loan fund conditions
to be lend to the Client
DPLC is issued by (3)
local bank

Sign an agreement, including

collateral conditions

In short, and just as a guidance, cost to get 100% funding with grace period over 30 years, it would cost
1% to Funds (which will be discount on the loan once money is transferred to Client´s banking account),
plus the annual interest rate agreed (1.8 – 2.8 %), that may start paying after grace period, it may pay
annually, per semester or at the end, as it has been negotiated and agreed, same for the installments

As optional, Financial Consulting service (which belongs to the Funds) could be hired to make smooth
the procedure and reach a better negotiation with the local bank, prepare contract, etc. That, it assumes to
reduce a 1% cost to 0.5 % due to their high negotiation power, etc.

Glossary

Return on Investment (ROI) is the benefit to an investor resulting from an investment of some resource.
DPLC (direct Payment Letter of Credit