PRIVATE PLACEMENT EQUITY PROGRAM (PPEP)

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1 PRIVATE PLACEMENT EQUITY PROGRAM (PPEP) Introduction The new and proven Crossway Capital PPEP program is funded by private investors in the form of HNWI s (High Net Worth Individuals), asset managers, hedge funds and other sources of non-bank finance from around the world. Through their Private Placement Platform (PPP) they make your project bankable by collateralising a bank guarantee (BG) which provides their security, meaning that your funds come to you as non-recourse finance with no liability on the company, its project or its officers. The minimum deal value is $100,000,000 with no upper limit and 100% funding is provided in exchange for a fix 20% equity participation. The PPEP program can be used across energy, infrastructure, real estate, resorts, hotels, transport, shipping and all other major project sectors. To use the PPEP program, there has to be a genuine project. It cannot be used for re-finance, cash flow or other purposes. Explaining PPEP The investors secure their returns through participation in the PPP that will be funding your project, which means funds will come to you as non-recourse or free and clear. For knowledgeable and informed financiers, this method of project financing has been used for major projects worldwide for seven decades since the end of WWII (for further information on how PPP s work please ask for a copy of Project Financing with PPP s ). However, the entry level deposit required to participate in a PPP is usually prohibitive for the majority of projects, which is why our investors need to underwrite your participation. The funder structures the financing between you, the investors and the PPP and, in return, requires an equity participation in the project. Hence the title: Private Placement Equity Program. However, there will be a standard loan application process leading towards 'non-recourse' financing, effectively providing your project financing as free and clear funds. The funder s 20% equity participation remains in place for the term of the nominal loan based on your forecast ability to repay, normally 10 to 20 years. At the end of this period, the equity is returned to you at no cost. The funding document is a COLT (Confirmation of Loan Terms). Application Requirements: 1. Shovel ready project (project plan, financials and all documentation proving project awaits only funding to move forward will be required). 2. Proof of funds for costs and charges (screen shot of bank statement or actual statement). 3. Able to pass a bankable compliance check. 4. Funder requires 20% equity participation. Please note that the funder seeks no direct involvement or influence over your company or the SPV created for the transaction. PPEP Guide 26Nov14 Page 1

2 The Structure: 'Desktop Due Diligence' followed by Issue of Commitment Letter 1 Signed and returned with fee 2 COLT (Confirmation of Loan Terms) document issued & signed. Duration: from 15 to 30 days Client deposit paid into funder's escrow account Initial tranche (dependent on deposit) Duration: approx. 60 to 90 days Balance of funding tranches paid in accordance with agreed drawdown schedule. Second and onward tranches 30 to 45 days. Application Process, Costs and Charges: For the quickest response, please complete the online submission form at or use the submission form provided to you by your Crossway Capital associate. This enables us to make a rapid decision as to whether your project is suited to PPEP or another program in our range of non-bank/alternative capital project finance programs. If approved, we will send you a full submission pack which initiates the following process: 1. In the first instance we need to prepare your submission and compliance pack which includes the KYC, NCNDA and other documentation. So that we can prepare your pack, please provide us with the following basic information simply as answers to the following questions: a. What is the name of the company officer and their position in the company who will be signing the final loan agreement? b. What is their address? c. What is the full name of the company and its constitution (LLC, Pty etc) d. In what country is the company registered? e. What is the company's registration number? f. Where is the location of the project (city/country)? g. What is the nature of your project (hotel/resort, waste-to-energy, solar, transport etc)? h. How much are you seeking to raise in EUR or USD? i. Please also provide proof of funds (POF) for DD/compliance fee and deposit. 2. The above information will initiate the preparation and ing of your submission and compliance pack, which needs to be completed in full and without reference to other documentation. Once your completed pack has been received, along with your full and complete project plan and financials, it will be reviewed before being presented to the funder. We will advise you when your submission has been forwarded to the funder. 3. When the funder has reviewed your submission, and based on the information you have provided in your pack and desktop due diligence, you will be sent a Letter of Interest PPEP Guide 26Nov14 Page 2

3 (LOI) from the funder. If you wish to move forward you will need to sign and return the LOI and pay an Intake Fee of $1,500. This fee is imposed to ensure that the underwriting and due diligence teams in the funder's office are not going to be wasting their time on clients who are only 'shopping' their deals around the market. 4. On completion of desktop DD you will be sent a Commitment Letter which details the preliminary terms of your funding which you will need to sign and return. At this stage you pay the balance of your processing/dd charge of $73,500 (being a total of $75,000) which covers legal, banking, collateralisation, insurance, site visit, Project Charter, Use of Funds and other legal document origination and other ancillary costs involved in preparing your transaction. 5. At this stage there will be a conference call with the funder or, if you prefer, you can arrange to visit them at their offices in the US. However, due to the nature of your structured non-recourse financing, it is important to ensure that you work within the deadlines given on your LOI and Commitment Letter (see Important Notice below). 6. You will also be sent a compliance pack which the PPP will need you to complete. This is very different to any loan application you will have encountered before, but the funder will assist you wherever necessary in completing this form. 7. After further preparatory work on your structuring, you will then be sent a COLT (Conditions of Loan Terms) form which sets out your loan terms, completion fees (to be paid pro-rata with each drawdown & added to your loan) and other matters. You sign and return the COLT form, and pay your deposit. There are three entry levels: Deposit First tranche 60 to 90 days $250,000 $25,000,000 $750,000 $75,000,000 $1,000,000 $100,000,000 Deposit for your next tranche is paid out of the preceding tranche and these are arranged on a case by case basis depending on the deal value and draw down requirements. 8. You will receive a COLT for each of your funding tranches and you will be required to pay a deposit of 2.5% of the forthcoming tranche out of the proceeds of the current tranche. Completion Fee: The funder will charge you a completion fee of 15% for which they will invoice you with each tranche paid to you from the escrow account. This 15% should be added to your principal and included in your 'Professional Services' or 'Cost of Financing' line in your financial spreadsheet. PLEASE NOTE: The ONLY completion or any other fee payable on the PPEP program is the 15% for which the funder will invoice you on payment of each tranche to you from the escrow agent. Any broker, introducer or similar intermediary fee agreements entered into by you will jeopardise your funding. If you have been introduced to PPEP through a broker, please advise them to contact us directly and we will come to a fee-share agreement with them. DO NOT enter into any separate fee agreement with them. PPEP Guide 26Nov14 Page 3

4 IMPORTANT NOTICE PPEP is a structured finance process. This differs from the traditional financing methods you may have become used to in that there are many entities and moving parts involved in your transaction each with their own professional, regulatory and other considerations to work within. These include investors/collateral providers, underwriters, financial instrument issuer, lawyers, bankers, traders, escrow manager and other professionals all working together, with their own costs to cover, to bring your financing to a successful conclusion. To ensure your transaction moves forward like clockwork it is therefore absolutely ESSENTIAL that you observe and meet the deadlines and remittances that will be presented to you as your process moves forward and as presented in this guide. Failure to do so will usually result in your transaction failing and costs you have paid being non-refundable as deductions to cover charges will already have been made. BEFORE RAISING ANY QUESTIONS, PLEASE BE SURE TO REVIEW THE FREQUENTLY ASKED QUESTIONS BELOW. FREQUENTLY ASKED QUESTIONS: I m confused about the deposit, please explain. Your deposit is paid after DD, compliance and other pre-financing activities are completed. It delivers your initial tranche (dependent on the deposit paid) after 60 to 90 days. You will pay a 2.5% deposit on your next tranche from the proceeds of the preceding tranche. Is my DD/compliance fee and deposit refunded? Your initial DD/compliance fee ($75,000) and deposit are not refunded as they are costs expended in securing your first tranche. Why should I pay you $1,500 just for you to look at my submission? Crossway Capital does not charge anything to review your submission and only go to the next step of presenting it to the funder once we know that it will be accepted by them. The funder then conducts preliminary due diligence which takes time and some money. Unfortunately, there are countless instances where clients have used us and them simply for 'fishing expeditions'. Therefore, before the funder spend time on a submission, they need this small show of commitment from you to assure themselves that you intend to move forward. The $1,500 intake fee is deducted from the full $75,000 DD and compliance fee. Why is the timing between receiving and signing our LOI and payment of our DD/compliance fee so short? Once you have been accepted into the program, all the parties involved are notified and they start preparing to include you in the upcoming funding round. This incurs costs and they need to see that you are ready, willing and able to participate fully in the upcoming process. After I ve paid my processing/dd fee of $75,000 is there any chance the DD will fail and I lose my $75,000? The only way this can happen is if you provided false information in your submission/compliance pack or subsequent documentation proves to be falsified or misleading in any way. PPEP Guide 26Nov14 Page 4

5 Will we be informed which company is undertaking the due diligence? For example companies like KPMG, PWC, Ernst Young, Deloitte etc? The funder conducts the DD, compliance and other pre-financing activities themselves on behalf of the funding platform. It s something they do every day as part of their normal run of private investment banking business. Is the Processing/DD fee refundable if we are unsuccessful? No. However, if the information you provided in your initial submission is true and correct, and there is nothing hidden or undisclosed about the company and its principals, there is no reason why your DD should not be successful. How long does the due diligence take? Two to three weeks. There is a conference call with the funder, with their projects manager on the line, once you have your Commitment Letter. That is, in effect, the start of your DD process. Do we get a copy of the DD report? There is no DD report as such. As part of your process the Projects Manager will produce your Project Charter, which serves as your DD report. If you do a site visit, we ll have nothing to show you. We can t start construction until we get the funding. There are few projects we fund that have anything to show at the outset. The site visit will be to establish the long-term relationship with you and to view the land you seek to acquire, check out technology, technology suppliers, verify the general area where the project is being done, and speak with municipality officials if appropriate. Subsequent site visits will also become necessary as the project progresses along. Can PPEP be used for acquisition as well as project finance? Usually yes, but check with us first. Can you lend in EUR as well as USD? Yes. How do I protect my $75,000 processing/dd fee and $250,000 deposit? In these days of rampant fraud we fully understand this question. However, it is a fact that ANY financial structuring has ALWAYS incurred costs and charges, which vary according to the structure and who s doing it. Our only answer is that you are dealing with an established funder/structure and, in Crossway Capital and the global team we are a part of, probably one of the most trusted brokers/gatekeepers in the new non-bank/private debt capital market. You can visit the funder at their US offices if you wish, after you have completed the submission process, but before you pay the balance of your $75,000 ($73,500) processing/dd fee. However, if the information you provide on your initial submission is true and accurate there is no reason why your PPEP funding should fail. What is your most recent successful deal closing? We have closed a project financing deal worth US $150,000,000 for a Waste to Energy Plant deploying a prototype generator technology in a South East Asian City, in November PPEP Guide 26Nov14 Page 5

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