A project-financed PPP Project necessarily involves an SPV which is party to carefully structured sub-contract arrangements and financing involving third party lenders, sponsor equity and guarantees or similar support at requisite levels (e.g. of equity or sub-contractor obligations). The SPV's income and expenditure are relatively transparent and its financial robustness assessable.
In a corporate financed PPP Project, this level of transparency may not be automatically present where the financing and sub-contracting arrangements are being kept within the relevant corporate group and no third party funding is involved. The Contracting Authority needs to be able to satisfy itself that its Private Partner in this scenario is at least as financially robust as it would be expected in a project financing (which would be largely ring-fenced from external factors).
As described in Section 10.2.2, at the bid stage, the Contracting Authority will need to consider what comfort it requires from the bidder to show that the relevant corporate funding will be forthcoming as there will be no third party lenders to provide the type of commitment letter typically required in a project financed bid. If the Private Partner is not demonstrably creditworthy in its own right (e.g. with a satisfactory credit rating), the Contracting Authority may need to request specific information about the proposed financing and/or require a form of guarantee or commitment letter from a creditworthy company in the corporate group (typically a parent company as its credit rating/financial standing will be the determining factor), or from a third party subcontractor or key supplier If the bidder is a consortium, the Contracting Authority will want the consortium members (or appropriate parent companies) to take on joint and several liability under any credit support (this may be a requirement rather than an option in a public procurement process where entities have formed a consortium to meet minimum financial standing requirements).