An undertaking either (1) to complete a project so that it meets certain specified performance criteria on or before a certain specified date, or (2) to repay project debt if the completion test cannot be met.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
An agreement between two companies in which one undertakes a project and the other provides financing. The first company agrees either to complete the project according to certain specifications or to repay the second company for all debt it incurred in financing the project. This reduces the risk to the financing company that the other company will be unable to complete the project and thereby leave it unable to service debt.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved