Principles of Project Finance

amendments without interference by mezzanine lenders, unless the result is

to increase the senior debt amount, as discussed above.

Blocking of payments. The place of the payments to mezzanine lenders in the

cash flow cascade may raise issues: do the senior lenders’ DSRA, or the Main-

tenance Reserve Account, have to be filled up before mezzanine lenders can

be paid; can payments to mezzanine lenders be blocked in a similar way to

payments to investors (e.g., if cover ratios fall below certain levels)?

Default. Mezzanine lenders want to have the right to take enforcement action

if they are not paid when due. It is difficult for senior lenders to exclude the

mezzanine lenders completely from taking action; a common compromise is

to require the mezzanine ...