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Soft Mini Perm Financing
Practical Law Glossary Item 1-500-2215 (Approx. 2 pages)
Glossary
Soft Mini Perm Financing
A type of mini perm financing that, if not refinanced by the maturity date, becomes subject to more onerous financial terms including:
- An increase in the margin on the loans.
- Most, if not all, of the project's excess cash flow must be used to pay down the principal amount of the loans.
- A prohibition on distributions to the project sponsors.
Borrowers and project sponsors prefer this structure over a hard mini perm financing which triggers an event of default if not paid by the maturity date.
For more information on these issues, see Practice Notes, Project Finance: Overview, Project Finance: Sources of Available Financing and Financial Covenants: Project Finance Transactions, and Project Finance Waterfall Provision Flowchart.
For more information on financing sources available to repay these loans, see Practice Notes, Sources of Available Project Financing: Term Loan B Facilities and Sources of Available Project Financing: Project Bonds.