PROJECT FINANCE
FREQUENTLY ASKED QUESTIONS
(General Terms and Conditions of Business)
When wishing to apply for project finance please visit our website and fill out the finance application form, for each project separately, and return same to us.
Please read the contents of our website www.vitalagroup.com very carefully.
All financing details are explained clearly
We also comply with:
- the USA Investment Advisory Act 1940 - the Foreign Corrupt Practices Act (FCPA) - the Sarbanes-Oxley Act 2002 - US Federal Money Laundering regulations under US banking regulations - the Financial Services & Markets Act (FSMA) 2000 - the Dodd-Frank Act 2010 (Wall Street Reform & Consumer Protection Act) - the Law on Investment and Enterprises 2014We do not offer, promote or sell financial services or products in the United Kingdom.
We would like to take the opportunity to explain how project financing, through The Vitala Group of companies, works in practice.
The Vitala Group Corporate Status
a) The "Vitala Group" is a trade name and not a legal corporation. Under its name it operates numerous individual Vitala Group companies all of which are legally incorporated and administered in offshore countries.
b) Vitala Group companies are not registered in the United Kingdom that is why there is no listing with the British Chamber of Commerce.
c) No Vitala Group company has ever filed for bankruptcy.
As we currently receive around 500 to 600 project finance applications monthly, we are unable to discuss each application with a prospective developer, either by phone or in separate meetings, before a project site visit has been arranged.
Instead we work with a well proven procedure of evaluation of projects, tested over the last 33+ year period in the international investment markets.
Without any contractual agreements, we are regrettably unable, to engage in drawn out communication with an applicant, as regards queries not relating directly to a specific finance application, neither are we in a position to respond to queries of the most unusual types, such as:
1) We could not find the Vitala Group of Companies on the internet?
2) We called one of the Vitala Group offices, but only answer machines replied?
3) Can we contact you via Skype?
4) How many employees work for the Vitala Group of companies
5) We contacted some of your past project developers, but they did not reply?
6) We applied for job offers to you on the internet. We sent monies for administration and other costs, but received no further replies?
7) Can we meet for a “coffee” to chat about or explain our project?
We do not advertise for jobs on our website, but we are aware of our name being used for fake job vacancies.
Our project evaluation and communication process follows logical lines, as outlined below.
We have also been retained, for some years now, by some government banks and financial institutions, to view and advise on their development projects.
You may note that we have not, in the past, ever been involved in projects which are unprofitable or not feasible.
We rarely advertise our services globally.
It requires about 8-10 working days (numerous security checks) to initially process a project finance application, through our Global Finance & Investments Division.
These security checks include:
a. Type of industry b. Size of project c. Political structure prevailing in the country at the time of application d. Economic situation prevailing in the country at the time of application e. Social/ cultural situation prevailing in the country at the time of application f. Religious structure prevailing in the country at the time of application g. Exposure to terrorism h. World Bank/European Central Bank/ International Monetary Fund - financial rating of country i. Military risk assessment j. Natural disaster assessment k. Seismic risk assessment l. Health/ fatal disease risk assessment m. Currency stability risk assessment n. Regulatory approvals riskProject finance application forms, which are not fully endorsed, cannot be processed.
Applications which are not accepted by us, for the reasons stated, will be communicated to the applicant in writing.
Once a project finance application is approved by us to proceed, the process is as follows:
1) The client receives a standard letter explaining initial procedures, timings and the forthcoming site visit procedures; a dateline is set for the first site visit period (project inspection).
2) A site must be visited and ownership must be proven by the applicant.
3) We must meet the Client on site and view the site, (a legal requirement).
4) Our standard letter of introduction mandates that any new prospective client has to pre-pay flight and related expenses for a site visit. Once the client has agreed dates, they will receive an elaborate written Meeting Agenda with which to proceed on our site visit.
a) They also have to sign a confidentiality / non-disclosure / non-circumvention agreement, to protect mainly their interests at this early stage.
b) The above demands ensure that the client really believes he has a project, and does not just dream or speculate. We, on the other hand, ascertain beforehand whether a project is worthwhile to pursue, as we do not wish to waste our time or the client’s money and time.
We do not charge for our consultancy time covering such site visits, and in the event of a Financial Procurement Agreement being signed (our Commission Agreement), we will refund all site visit costs. This is also clearly stated on our website.
5) The 1st Project Site Visit, by at least one of our senior executives, remains mandatory for legal reasons and serves to:
a. Meet the client, his partners/management team and physically verify the accuracy of the project ideas proposed,
b. View the site, and its surroundings, together with the client,
c. Meet local officials and to ascertain to what extent this project is known of and welcomed,
d. View all plans/studies/documents/drawings/tests/surveys, as completed and available, and enquire about planning and building laws in force locally.
e. Confirm all future procedures/ timings/ requirements with the client as well as assisting in determining the future development costs and timing issues.
6) A pre-paid Business Class airfare ticket(s) and local site visit costs are to be paid for by the client, covering one or two of our executives. These are not "upfront costs" but are security costs, and these costs are fully refunded, if and when we enter into any contractual relationship thereafter.
a) Our executives do not fly Economy Class, nor do we accept hotel/flight package deals.
b) Once the Business Class flight fare has been pre-paid to our travel agents, we issue a written site visit agenda and forward a corporate information package with written client references and other related material.
c) IATA rules state that it is not possible to accept pre-paid air tickets from overseas, since under IATA airline carrier rules a passenger is not supposed to travel on a ticket which was not originally issued at his domicile, to where he must return. Warsaw Act Convention rules are applicable.
Also, our international health insurance provider has advised that any insurance cover would be null and void if a passenger was travelling on a non-IATA airline issued ticket, thus breaking travel insurance cover regulations, which had not been issued at the domicile of the passenger. We would be the first to accept pre-paid and/or pre-arranged flight tickets from clients as obviously those can be obtained much cheaper from the country of origin.
Unfortunately airlines protect their pricing policy by forcing us to purchase tickets from the destination of our legal residence. These fares are referred to as "published fares" and are consequently more expensive than the air fares available from a client's location.
Furthermore, in today’s climate of terrorist threats worldwide, many airlines have ruled that air tickets may only be issued in the passenger’s country of residence, and many countries have enacted terrorism legislation to this effect.
As a result of all these factors and the threat of terrorism, we have been obliged to implement strict procedures globally on the purchase of flight tickets for site visits, and we would ask you to follow these procedures, in order to facilitate the organisation of the proposed site visit.
We have been advised by our legal team that health, travel and life insurance cover for our executives would not be valid for journeys where tickets have been arranged by third parties.
Also, some years ago one of our executives received such a ticket and was not allowed to board the airline – his ticket was regarded as invalid.
d) Pre-paid airline ticket costs are always paid through our travel agents, Holmes Travel Ltd,and and NOT TO ANY OF OUR COMPANIES.They are independent UK travel agents, ABTA bonded and we have dealt with them for over 30 years successfully and do not own any shares/interest in their company.
They maintain our independent client account.
7) Many general project questions cannot be answered UNTIL WE HAVE MET AT THE SITE VISIT. We are unable to deviate from this procedure.
8) After completion of a site visit, we issue a written Observation Report, free of charge, summarising all our findings and pointing the way forward.
9) We are always prepared to discuss country representations/ agencies, by individuals; however this can only take place after a site visit and having met in person.
10) WE DO NOT CHARGE ANY UPFRONT OR HIDDEN FEES, except a 5% success commission upon any funds a client accepts/avails themselves through us.
The 5% success fee is only payable when a client accepts a loan and has signed a Financial Procurement Agreement. It is either directly deducted or paid separately by the client.
There are no partial commission payments to be made.
If the client does not accept the loan, WE HAVE NO FURTHER CLAIMS.
We work at our success fee risk only; we do not charge consultancy fees for project finance either.
Here are the replies to a number of other related questions you may have:
1) How long have individual Vitala Group companies been in business?
Since 1983.
2) Does the Vitala Group finance industries other than tourism, leisure and entertainment?
YES, all types of industries, subject to review of the individual financing application form submitted.
3) What project industries/ sectors does the Vitala Group NOT consider for financing?
i. Projects already partially or fully under construction
ii. Land acquisitions and/or property purchases only - UNLESS project development is added iii. Projects with zero equity iv. Proposed sale of property assets v. Private loans vi. Debt/Lien settlement vii. Acquisitions of Shares/Bonds viii. Buy outs/Buy ins and/or partner’s equity stake ix. Angel Investment/Funds x. Cash Injections/Provisions xi. Joint venture capitalisation/Funds for partnership xii. Refurbishment only of existing projects xiii. Project renovations, if the renovation value is less than 80% of the total project value xiv. Projects with less than 25 year land lease agreements xv. Mergers stakes xvi. "Unethical" project proposals xvii. Costs to meet the re-settlement of residents to another site locationWe do not deal with:
a) Invitations to tenders or competitions of any type b) Joint Venture invitations c) Requests for proposals (RFP) d) Requests for information (RFI) e) Requests for Expressions of Interest (RFEI) f) Financing participation in Public Private Partnerships (PPP) g) Advertisements for employment h) Project quotations/ construction cost estimates/ quantity surveys i) Government owned or sponsored projects (we require the Developer to be a corporation)4) Interest rates
can only be determined close to the closing of a loan agreement, and not before. Future interest rate calculations are set by the World Bank and International Monetary Fund.
5) Can you provide an estimate of project development costs an applicant will incur before receiving project finance?
NO. We can only advise on due diligence costs and other project finance costs, to be met by the applicant as part of their future assets, once a site visit has taken place.
6) How much are collateral costs?
It is almost impossible to advise what and how much loan collateral will be, until the project has been assessed by international standard feasibility studies. Usually, the collateral will be the assets of the project, i.e., land / machinery / etc.
7) What kind of security do you need to give to lenders?
We usually take possession of the land deeds for the duration of the loan period, as well as a first security charge over all other assets.We do not require personal finance guarantees from developers.
8) If we already have existing loans, how will Vitala deal with them?
We usually buy out all existing loans, as all our lenders require to hold a “first security” position over all assets and outstanding loans.
9) The length of time to finance a project,
through us, depends upon many factors, including:
a. The availability of acceptable feasibility studies,as outlined/discussed with us at the site visit, b. The physical condition of the site c. Whether any people have to be evicted or re-settled from the site d. Whether flooding of the site has been an issue in the past e. Whether the chosen site has a history of seismic eruptions f. The depth of the “political” connection of the Developer with local planning authorities g. The degree of difficulty of a specific project, i.e. more components means more considerations and research = more time h. The period of time your country’s National or Central Bank requires to receive incoming foreign funds (various checks for illegal money sources, mafia originating funds; drugs or crime related funds; money-laundering, etc). Besides this there are a few other considerations that we do not regard as particularly time-consuming. We therefore cannot venture to give a guideline for timing unless we have physically visited the site. The latter is one of the major reasons to determine the planning period timeframe for project financing.10) Is project financing guaranteed?
NO.
Projects are always risky financial undertakings and there are many risks a developer cannot cover, like force majeure, coups d’état, Tsunami, and the like. The probability of your project getting funded depends upon the thoroughness and detail of all feasibility studies. The format has to conform to international professional associations as well as World Bank/European Central Bank/International Monetary Fund - standards. However, since 1983, the commencement of our global commercial existence, the only projects we have seen fail are due to either force majeure, unexpected seismic events, misrepresentation, non-disclosure of fraudulent activities by investors, deception or similar.11) Do you provide a Letter of Comfort (LOC) or Letter of Intent (LOI)?
YES, After the first site visit has taken place and your project has been accepted.
a. We do not issue any LOIs in advance for Government or other security purposes or for any other reason. b. We are unable to issue LOIs or LOCs covering projects which we have not inspected and for which we have received only written information, which needs to be verified by a site visit.This is one of the main purposes of the proposed site visit. c. Loan guarantees/ bank guarantees/ letter of comfort/ promissory notes and similar legally accepted documents are only issued through a loan committee/ loan syndicate/ investors.12) If we already have existing loans, how will Vitala deal with them?
NO, not at any stage.
13) Do you need / accept government or bank guarantees?
NO, but sometimes it helps a specific type of project.
14) Can the Vitala Group provide individual project loan Terms & Conditions in advance?
We are unable to provide specific information on terms and conditions as we:
a. Have no verifiable information about your project at hand b. Have not met you or any of your investors/ managers c. Have not visited and verified the project site d. Have not perused and advised you about the information you need to provide to us e. Were unable to enquire about commercial references covering your project f. Are not aware of the potential profitability/cash flow of the proposed project.15) What other costs are involved and need to be covered in the initial stages?
The developer has to cover all costs to “bring the project to the financing table”, this means acquisition of the land, land related tests, surveys, government permits of all types, all feasibility study costs, document translation costs, etc.
All those are determined and advised upon at the site visit. Every project needs a developer (corporation). We are only concerned with project finance issues.16) Can we provide past client project “financing” references?
YES.
In some cases the client does permit this, but it is rare, as clients do not want to discuss their financial information with outsiders. Written references are available once a site visit has been agreed, as part of our corporate information pack which is sent to the client. Previous clients are always bound with us in written non-disclosure documents, lasting for a number of years, and we have to honour this. Our Schedule of International Experience indicates this, where applicable.17) Do we pay commissions to intermediaries for projects introduced?
YES we do, on a project by project basis, subject to a loan having been concluded.
a) The commission is paid from the Vitala Group’s success fee. b) Any commissions are paid once a loan has been placed.18) Who pays the Broker’s commission?
WE DO, subject to individual Commission Agreements entered into with our Group.
Brokers often obtain a separate finder's fee/commission fee from a client, in addition to the commission payable by the Vitala Group.19) Do we permit Brokers/ Representatives to charge an upfront fee/ payment
and/or contract with a project applicant whether or not under the assumption that this will help/ assist a project finance application, or as a prelude to introducing the Vitala Group’s project finance services? NO, not under any circumstances.
20) Can we contact the Vitala Group with additional questions or can we meet before a site visit?
All questions will be answered and solved during the site visit.
We are unable to accommodate this due to the sheer volume of applications we handle at any given time,and there is no point in holding discussions with parties we have not yet met. We are unable to discuss project application matters by telephone or by Skype, due to the lack of a written record.21) Can we advise the project financing costs in advance?
NO, we cannot, as too many factors are involved, which need to be clarified at a site visit first and thereafter we can provide a broad indication only.
22) Can we send Business Plans/other documents to the Vitala Group prior to the site visit?
YES,but these can be viewed onsite; there is no point in viewing documents without having seen the site and meeting the developers beforehand.
23) Can the Vitala Group finance/participate or pay for initial developer’s costs?
NO.
a. We cannot for legal and ethical reasons, and to avoid any Conflict of Interest. b. We do not accept any commissions/ payments and/or gifts, other than our 5% success fee during the project finance process. c. This would render our ability to approve project loans as invalid.24) Can the Vitala Group share developers’ costs or enter into a Joint Venture, from the start?
NO,
We cannot, for the reasons explained above in no (23). This would interfere with our independent role in approving project documentation for financing.25) Does the Vitala Group demand or accept any commission payments from lenders/Intermediaries/others,during the process of arranging project financing?
NO, not under any circumstances.
a. Under no circumstances do we accept any inducements/commission from lenders or any other parties, other than our 5% success fee. b. We act independently from the project applicant and lenders, during this period.26) Does the Vitala Group advertise its project finance services?
NO.
We have no commercial need to advertise, in order to avoid attracting dishonest Spam/upfront money applicants and/or other dubious operators, and also to reduce/maintain the level of Spam e-mails we receive daily.27) Do you deal with “Islamic” finance?
NO.
28) Are you registered with Credit Rating Agencies?
NO.
We do not release privately held information about any of the Vitala Group of companies to any outside sources/agencies. This reduces opportunities for fraud, scams or spam emails.29) What are the “loan to value” ratios required?
The most common ones are: 80: 20, 70 : 30, 60 : 40, but sometimes 100 % project finance can be provided, depending upon the project type / industry / risk evaluation criteria.
30) Do you provide “Non–Recourse Finance”?
NO.
Our loans are funding and our lenders are only entitled to loan repayments from the profits of the project, not from other assets of the borrower.31) Does the Vitala Group engage other parties to finance projects?
NO, we form lending syndicates and in most cases, become financing partners, subject to the prior approval oflending syndicates.This however, never takes place before a project is signed up to be financed.
Otherwise this would be unethical and infringe our independent evaluator status. Only the client maintains the right to accept or reject any of our proposed loan/ lending parties or deals.32) How does the Vitala Group provide project finance to applicants?
a. We approve all project documentation and then select lender syndicate participants/ members and form the lending syndicate
b. The syndicates are made up of various institutions, private and Government investors. The syndicates can only be formed after completion of all feasibility studies and architectural requirements, i.e. after the initial site visit c. Thereafter, we propose numerous loan options to the clients/ applicants d. In many cases, we are appointed by the lending syndicate to oversee the loan development phases e. We have to issue irrevocable financial guarantees to lending syndicates, to ensure that all documentation to be approved by us meets World Bank and IMF standards.33) Does the Vitala Group act as a direct lender?
The Vitala Group specialises in forming lending syndicates so as to reduce the financial lending risks to individual parties. After the Vitala Group’s approval of all feasibilities studies to the lending syndicate, Vitala Group companies may become members of and join a syndicate, provided that they are not appointed as “loan supervisors” on behalf of the lending syndicate.
34) Under which legal framework is project finance dealt with?
a. Upon submission of loan proposals to the client, loan proposers, brokers and financial intermediaries need to be advised that the Vitala Group will require direct contact with those involved in the project finance process after its first introduction.
b. This requirement is mandatory, in order to comply with the Foreign Corrupt Practices Act (FCPA), the Sarbanes-Oxley Act, and with US Federal Money Laundering regulations under US banking regulations.As well as the UK Bribery Act (2011).35) We do not represent project applicants, neither lenders nor other third parties
We are independent, approving all feasibility studies in order to raise loans.
Lenders' syndicates require Vitala Group companies to issue irrevocable financial guarantees to ensure that the approving company(ies) does not collude with a client's potential project results.36) Do we permit a Broker/Commissioned Agent/Representative to charge an additional fee to a client?
YES, in addition to any commissions receivable from us, provided a client agrees to this beforehand - but ONLY commission fees, not other charges.
There are many other questions we could address, at this stage, but those are really the purpose of a site visit to be concluded. If and when, (in exceptional circumstances), our view is that a project will not be able to be financed, we will state this clearly at the conclusion of the site visit. Projects which do not appear to be profitable and are not able “to stand on their own feet” fall into this category. As we only receive a success fee, we are not in the market to speculate upon opportunities. We are obviously interested in pursuing projects which indicate commercial opportunities and those have to be measured by international feasibility standards. As we are in the business to finance projects, by forming financing syndicates to reduce capital risks, you will appreciate that our procedures are fair, legally and ethical correct and we are not interested in applications which do not understand the need for timely and streamlined procedures. All communications are issued and/or confirmed, in writing by us, to leave no doubts as regards what has been said or agreed upon, by the various parties involved.37) Are brokers/ commission agents/ intermediaries permitted to represent the Vitala Group of Companies?
NO.
Brokers/ intermediaries are simply acting as "introducers". They are not employed nor trained by Vitala Group companies. They act on their own behalf against commission payments. We are not responsible for their statements or declarations.38) Another question often asked is with regards to Developer’s related research costs?
These can only be determined after a project site visit has taken place, with all due diligence carried out and completed.
39) Can VITALA make use of developers’ feasibility studies and architectural support materials?
YES, provided they conform to World Bank and other internationally recognised standards.
We receive all types of “Developers’ executed feasibility studies” and support materials. They come under different names, such as Business Plans, Development Overviews, Summaries of Projects, etc. For project lending purposes, feasibility studies/ architectural design concepts have to be provided at the developers’ costs, constituting part of their assets. Lenders want to see that developers incur costs and take risks as well.They need to be convinced about their project ideas. The problem in attempting to evaluate and approve those studies provided by developers to us for project financing, are in the main: a) These feasibilities/studies are not carried out by an independent industry related or qualified entity, b) They are often only opinion-based and/or developers were emotionally involved in the preparation, thus making documents biased c) Often they are dated, d) They are not in an English language format, e) Financial documents are rarely provided on a “revenue inflow” cash flow model, but on a project model basis (opinions rather than research) f) Any research carried out previously does not carry footnotes identifying the research sources used g) Architectural designs are completed but not based on the Market and Feasibility research results (they are often just unrealistic pretty pictures/visuals) and are completed without any project research evidence h) Feasibility formats are not based upon World Bank/ European Central Bank/ IMF/ other Associations’ criteria, set out for global project financing purposes. As a result, and this is one of the purposes of our proposed site visits, we can ascertain and then advise on the feasibility package to be provided by developers, on a case by case basis. We will always attempt to use as much of a developers’ past information as available, to reduce costs. In the end, The Vitala Group has TO APPROVE ALL FEASIBILITIES and render financial guarantees to investors, so as to confirm accuracy.