The financial planning for a construction
project requires payment security for the contraxctors but also
performance guaranty for the clients. By establishing an escrow
agreement, Chelton Capital can adapt the cash management and the
safe distribution follow up of the payments or pre-payments alongside
the project schedule and thus provide certainty of to all parties.
The escrow agreement is generally initiated by the client’s
project managers and is structured in close cooperation with Chelton
Capital.
The financial structuring must satisfy many
parties. Chelton Capital, the trusted independent third party,
has the experience to handle such negotiations in respect to the
release conditions (rights & obligations
of all parties involved) for complicated cross-border projects. The
escrow agreement provides clarity and comfort to all participating
parties.
Example
A turnkey power plant project contractor decides that it wants
100% payment security for executing an overseas Gas turbine power
plant project in Korea. The client is a conglomerate including
a minority interest for the local government. In exchange the
conglomerate wants a guaranteed performance for the Gas turbines
and the production of electricity (Performance Bond). Chelton
Capital will release the payment to the contractor and/or sub-contractor
after each construction phase and finally release the performance
bond when the conglomerate is satisfied with the level of production.
The contractor is therefore sure the funds will be paid promptly
when each phase is finished. The clients (buyers) are certain
that the contractors are paid after delivering the required services
and in accordance with the payment schedule in the project plan.
