The role of project company

In the project financing activities, the establishment of the project company plays a very important role: first, through the establishment of the project company, the ownership of the project assets is concentrated in the project company, rather than scattered in many companies owned by various project sponsors around the world, which is convenient for management. Second, through the establishment of the project company, the debt risk and operational risk of project financing are mostly limited to the project company, and the project company bears limited liability according to its balance sheet. The establishment of the project company shows that the lender's limited recourse can not be traced back to the parent company of the project sponsor, and the project company directly bears the debt, assets and cash flow of the project as the only source of repayment. Third, the establishment of a project company is easy to attract other investors. In the equity operation, if new investors join the project, there is no need to re-divide the project assets, as long as the project company issues new shares or transfers the shares of the original project company. Fourth, the project company can be an entity, that is, a company with assets required for project management, and the actual project operation is entrusted to a management company with rich production management experience.