10. Loan conditions10. Loan conditions

10. Loan conditions

(1) Loans will be the default Financing Mechanism considered for all Investment Proposals.

(2) The Facility may propose, but is not limited to, the following loan concessions:

(a) longer loan tenor than offered by Commercial Financiers, not exceeding the longest term of Commonwealth borrowings;

(b) lower interest rates than offered by Commercial Financiers, which must not be lower than the rate at which the Commonwealth borrows at;

(c) extended periods of capitalisation of interest beyond construction completion;

(d) deferral of loan repayments or other types of tailored loan repayment schedules;

(e) lower or different fee structures than those offered by Commercial Financiers;

(f) ranking lower than Commercial Financiers for cash flow purposes.

11. Alternative Financing Mechanisms

(1) The Board may consider using alternative Financing Mechanisms to a loan where:

(a) it may be more appropriate for a specific Project; or

(b) it is necessary to encourage private sector participation in financing a Project.

(2) All sections and schedules to this Direction apply to any alternative Financing Mechanisms, other than section 10 and Criteria 5 and 6 of Schedule 1.

(3) Where the Board considers that an alternative Financing Mechanism is preferable to a loan, the Board must write to the responsible Minister seeking agreement and outlining:

(a) why the alternative Financing Mechanism is preferable;

(b) the estimated commercial value of any concession proposed with the alternative Financing Mechanism; and

(c) the impact the alternative Financing Mechanism will have on the Risk Appetite Statement (see section 12 of this Direction) and on the Facility’s appropriation.

(4) The responsible Minister will seek the agreement of the Minister for Finance prior to determining if the alternative Financing Mechanism will be provided, and will consult with the relevant jurisdiction.

(5) The Facility will not offer an alternative Financing Mechanism that would provide for equity to be provided for any Project.