How Revolving Credit Facility is used in Project Finance?
By: Greg Ahuy
Date: August 15, 2021
In this article, we will take a look at revolving credit facility or revolver in project finance.
In project finance transactions, the project’s capex is typically funded by the debt, in the form of the construction debt, which is then refinanced into the term loan during the project’s operation, and, equity coming from the project’s sponsor.
However, during the project’s operation, the project may need a line of credit from the lenders, which is called a revolving credit facility.
Revolver, in project finance, is usually a stand-by facility, subordinated to the term loan, debt service reserve account, and maintenance reserve account. This is in contrast to corporate finance, where a revolving credit facility is usually a senior debt.
