III. Overview of the Process for Obtaining a Loan Guarantee
The loan guarantee application process is organized into the following four (4) phases; DOE
will consult with the U.S. Department of the Treasury (“Treasury”) and the U.S. Office of
Management and Budget (“OMB”) during these four phases as DOE deems appropriate or as
required by law or regulation:
1) Application: Project Sponsors may submit applications in response to this Solicitation in
accordance with the detailed instructions provided in Attachments A1 and A2. An
aggregate application fee is payable in the proportionate amounts set forth in Attachment C
upon the submission of Parts I and II of the application.
2) Project Evaluation by DOE: During the evaluation of an application, DOE will undertake
its due diligence and project underwriting, with the assistance of its independent consultants
and outside counsel. As a result, it is expected that extensive dialogue between DOE and
the applicant will occur with respect to all aspects of the project. Based on the information
provided by the applicant, appropriate environmental review and DOE’s due diligence
results, a project evaluation report will be prepared, resulting in a recommendation to
DOE’s Credit Review Board (“CRB”) with respect to the issuance of a Term Sheet to the
applicant.
3) Term Sheet/Conditional Commitment: If the CRB approves the issuance of a Term
Sheet to an applicant for a loan guarantee, DOE will notify the applicant and lender in
writing and provide them with a proposed Term Sheet that sets forth the general terms and
conditions under which DOE may enter into a Loan Guarantee Agreement. Upon the
earlier of (i) the issuance of the Term Sheet to an applicant pursuant to such CRB approval
or (ii) the commencement of negotiations with an applicant on a draft Term Sheet, the
applicant must pay to DOE the facility fee (or Second Fee) as set forth in Attachment C for
its application to be considered further. The issuance or negotiation of a Term Sheet does
not constitute a commitment by DOE to issue a loan guarantee. The proposed terms and
conditions of a Term Sheet are subject to negotiation. DOE will promptly notify the
applicant, in writing, of any DOE decision not to finalize a Term Sheet. Any changes in the
terms and conditions from the Term Sheet offered to the applicant will be reported to the
CRB for approval. If the CRB approves these changes, or makes its own changes, the
applicant will be presented with these revised terms and conditions. If the applicant agrees
with and executes the final Term Sheet approved by the CRB, the Term Sheet becomes a
Conditional Commitment between DOE and the applicant. In accordance with Section
6
609.2 of the Final Regulations, the Secretary may terminate a Conditional Commitment for
any reason at any time prior to the execution of the Loan Guarantee Agreement; provided,
however, the Secretary may not delegate his/her authority to terminate a Conditional
Commitment.
4) Final Approval of the Loan Guarantee Agreement and Closing: When the applicant
has met all the terms and conditions of the Conditional Commitment to DOE’s satisfaction,
DOE will prepare and submit a record of decision (“ROD”), as approved by the CRB,
supporting the issuance of a Loan Guarantee Agreement for the benefit of the applicant’s
project to the Secretary for approval of a definitive Loan Guarantee Agreement to be
executed on a closing date to be agreed upon. The Department’s General Counsel will
advise as to whether all conditions precedent have been satisfied prior to closing. Upon the
advice of the General Counsel and approval by the Secretary, DOE and the applicant will
set a closing date. At or prior to such closing, the Applicant must pay the Credit Subsidy
Cost and the maintenance fee (Third Fee), as set forth in Attachment C. The Secretary, or
his/her designee, will sign the Loan Guarantee Agreement at closing.
Requests by DOE for additional information, documentation, or briefings do not signify that a
project has been selected for due diligence, underwriting and negotiation or approved for a loan
guarantee. Extension of a loan guarantee is subject to, among other things, definitive
negotiation of financing, guarantee, and project documents on terms and conditions satisfactory
in all respects to DOE, consultation with Treasury regarding the terms and conditions of the
potential loan guarantee, approval of the Term Sheet by the CRB and final approval by the
Secretary.
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