The suite of standard form documentation produced by SFT will define surpluses in cash terms as this ensures greater transparency than, for example, an accounting measure of distributable profit. The financial commitments of the Project Company will have the following order of precedence:
• Normal project expenditure (e.g. payments to sub-contractors)
• Payments to senior funders
• Cash reserve requirements under the funding agreements
• Payments to junior funders
• A cash buffer
• Payment of surpluses
The Project Company will be entitled to retain a level of cash (over and above funders' reserves) and will be required only to pay out surpluses above that buffer. This gives the Project Company a contingency for dealing with any unexpected events that may arise during the life of the project.
Surpluses (if there are any) will be payable every 6 months provided that payment would not put the Project Company in breach of any legal or contractual obligations or the directors in breach of any of their legal duties.
The Project Company's share of any Refinancing Gain and of any savings generated by a Project Company Change will not be caught by the surplus payment provisions but will be payable to the investors.