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PRIVATE SECTOR (NONSOVEREIGN) OPERATIONS

Description

13.1 ADB undertakes nonsovereign operations[1] to provide direct financing and/ or risk mitigation to entities, or for projects or business activities, in developing member countries. Nonsovereign operations refer to any loan, guarantee, equity investment, or other financing arrangement that (i) is not guaranteed by a government; or (ii) is guaranteed by a government under terms that do not allow ADB, upon default by the guarantor, to accelerate, suspend, or cancel any other loan or guarantee between ADB and the related sovereign.

13.2 More information is available at adb.org/About/Private-Sector/ default.asp. Inquiries on private sector operations not discussed in this handbook should be addressed to ADB's Private Sector Operations Department (PSOD).

Disbursement Procedures

13.3 In all cases, the disbursement procedures should be specified in the contractual agreement with ADB, i.e., loan, investment, issuing bank, or revolving credit agreement.[2]

13.4 After the receipt of the borrower's disbursement request in accordance with the specific loan agreement, PSOD will prepare the authorization for private sector disbursements together with a complete set of loan or investment documents as attachments, to initiate the disbursement process. The Controller's Department (CTL) should receive the authorization (i) at least 3 working days prior to the proposed disbursement date for US dollar-denominated loans, and (ii) at least working days prior to the proposed disbursement date for local currency loans.[3] For disbursement of local currency, PSOD coordinates with the Treasury Department, as appropriate, before the proposed disbursement date.

13.5 These disbursements may take place in predetermined tranches on specified dates, or at call. The disbursement may also be made through reimbursement to the investee company for expenditures incurred, or to confirming banks against letters of credit in favor of suppliers.

13.6 ADB's disbursement for private sector loans, equity investments, and revolving credit facility (RCF) of Trade Finance Program (TFP) are subject to

• the loan, equity investment, or RCF agreement having been declared effective by ADB;

• the borrower or recipient, as applicable, having submitted to ADB a certificate of incumbency sufficiently evidencing the authority of the person(s) who will sign the disbursement request (substantially in the form shown in Appendix 13A); and

• any conditions for withdrawal as specified in the loan, equity investment, or RCF agreement having been met.

13.7 Before disbursement can be made, ADB requires the following:

• Private Sector Loans:

° form of disbursement request (substantially in the form shown in Appendix 13B) signed by an authorized representative of the borrower;

° a signed undated disbursement receipt, if required by the loan agreement, indicating the amount received by the borrower with the date to be filled in by ADB after the disbursement is value-dated (substantially in the form shown in Appendix 13C);

° a promissory note, if required by the loan agreement in the case of B-loans[4] (substantially in the form shown in Appendix 13D); and

° any other documents specified in the loan agreement.

• Equity Investment:

° capital call request signed by an authorized representative of the borrower; and

° any other documents specified in the equity investment agreement.

Trade Finance Program Disbursement Procedures for Revolving Credit Facilities

13.8 Before disbursement can be made, ADB requires the following:

• form of disbursement request (substantially in the form shown in Appendix 13E) signed by an authorized representative of the borrower;

• a bank's acknowledgement of the receipt of funds by email within 3 business days from the date of disbursement;

• a subloan summary report on each subloan that is proposed to be financed out of the proceeds of the disbursement (substantially in the form shown in Appendix 13F); and

• any other documents specified in the revolving credit agreement.

Trade Finance Program Disbursement Procedures for Revolving Partial Credit Guarantees

13.9 Before reimbursement of claims by confirming banks can be made under the TFP partial credit guarantee facility, ADB requires the following:

• a claim disbursement request form (this form will be developed when needed);

• a notice of unpaid claim form (substantially in the form shown in Appendix 13G) to be delivered by authenticated SWIFT or tested telex and followed by hard copy; and

• any other documents specified in the confirming bank agreement.

13.10 Before ADB makes a participation contribution to confirming banks under a TFP risk participation agreement, ADB requires the following:

• a notice of participation contribution (substantially in the form shown in Appendix 13H); and

• any other documents specified in such notice.

  • [1] ADB. 2010. Nonsovereign Operations. Operations Manual. OM D10. Manila.
  • [2] Technical assistance is not covered by this handbook, but is covered by the Technical Assistance Disbursement Handbook (2010, amended from time to time).
  • [3] Before CTL receives the authorization, the Office of the General Counsel endorses the initial authorizations for all private sector operations disbursements and, where required by CTL, for subsequent equity investment disbursements.
  • [4] B-loan means a loan made by ADB funded by a third party or parties without the borrower or third parties having any recourse to ADB. It involves the prearranged transfer to commercial lenders of participation in a ADB complementary loan, but without credit recourse to ADB for debt service. ADB is the lender-of-record as the B-loan is made in the name of ADB.
 
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