Participating Bank (ConTour) Construction/Tourism-Linked Relay Facility
Participating Bank (ConTour) Construction/Tourism-Linked Relay Facility is aimed at promoting the development of tourism projects and facilities in Africa to international standards and on a commercial basis through a risk sharing arrangement that leverages Participating Bank’s strong credit standing and its preferred creditor status in its member countries.
- The ConTour Structure enables Participating Bank to transfer the construction risk to parties best able to bear them, e.g. contractors, local banks with good local knowledge, etc. while it retains the operating risk which it is well equipped to manage.
- With Participating Bank’s Refinancing Undertaking, the parties financing the construction phase are provided a sound basis for providing funding as they can pre-finance the construction contract on the basis of Participating Bank’s off-take once they are satisfied with the performance risk of the contractor.
- The project is afforded the opportunity of achieving a longer financing maturity than Participating Bank and/or the entity financing the construction phase will ordinarily be willing to give.
- Therefore, ConTour effectively turns a project financing into something akin to a typical pre-export trade finance deal structure that is easily managed thereby lowering the overall cost of funds.
Product Title: Participating Bank Construction/Tourism-linked Relay Facility (ConTour or the ”Facility”).
Brand Name: ConTour Africa. This brand name has been chosen to:
- Ensure it is easy to pronounce;
- Ensure it carries Construction and Tourism prefixes;
- The pronunciation conveys the message “Come and Tour Africa” which is the main goal of the product; and
- ConTour conveys the goal of the Bank to use the product to change the construction and tourism landscape of Africa for the better.
- Ensure it carries Construction and Tourism prefixes;
Brand Owner: Participating Bank.
- Construction Firms
- Local Banks
- International Banks.
Tourism projects in the following areas.
- Cities, targeting business and conference tourism.
- Resorts, targeting leisure tourism.
- Projects that promote immoral activities.
- Gambling facilities, although small casinos can be one of the offerings of hotels that may be supported.
- Projects that destroy the environment or the culture and tradition of the host community.
- Projects that have heavy religious bias (together “the Negative List”).
African Content: The Construction works and the hotel operation must satisfy a minimum of 30% African content, measured by the sum of rent, interest, wages, and profit retained in Africa per annum.
- Participating states of Participating Bank.
- Projects in Non-Participating States may be financed if substantially (60%) owned by entities in Participating States and it can be shown that up to 40% value-added will accrue to a Participating State or a group of Participating States; and if such a project is capable of promoting African trade and culture and attracting tourists to a Participating State.
The Contour Facility is structured as a Dual Tranche Facility – the “Original Facility”, and the “Relay Facility”. Under the Original Facility, the Loan Provider (Construction Firm or Bank), as shown in the Figure above, will fund the construction phase of the hotel project backed by a “Contingent Guarantee” or “Standby Letter of Credit” issued by Participating Bank. Upon completion of the hotel, and certification by an acceptable independent engineer, the Bank will, under the Relay Facility refinance the Fund Provider. The Refinance is triggered on the date at which the project is certified completed and the Lender demands a refinance from Participating Bank. The Bank may also, if requested by the Hotel Promoter, provide working capital facility and funding for Furniture, Fittings and Equipment (FF&E).
Tenor: The tenor of the Relay Facility willdepend on the project cashflow forecast and may be up to 7 years from date of signing the Facility Agreement.
Pricing: Based on Participating Bank pricing model.
- Facility Agreement.
- Contingent Guarantee Documentation under Original Facility.
- Account Charge.
- Deed of Assignment.
- Legal Opinion.
How to Apply:
Application should be sent to Participating Bank. Such an application should contain the following:
- Detailed Information on the Project Promoters, including Company Profile and most recent financial statements (immediate past 3 years).
- Feasibility and Market Study for the Project.
- Preliminary Business Plan covering 7 years operation.
- Proposed Operators and their detailed profile.
- Proposed brand and brand information.
- Any initial Engineering Design.
- Proposed contractors.
- Title to proposed property on which project will be developed.
- Copies of Governmental approvals.
The Bank, Project Promoter and the Lender of the Original Facility will appoint an Independent Engineer who will issue a Completion Certificate confirming that the Project is completed and ready to operate. The Bank will also conduct due diligence on the Project, including review of the Business Plan and Marketing Plan.
Customer Due Diligence (CDD) Policies and Procedures: Anti-Money Laundering and Terrorist Financing and Know-Your-Customer (AMLTF/KYC)
The Bank ensures that its CDD Policies and Procedures are in compliance with international best practices on AMLTF/KYC issues. Applicants are therefore expected to submit themselves to necessary CDD procedures as may from time to time be in force in the Bank.