Course Details
Course Outline
5 days course
What is Project Finance?
- Definition – “Project Finance” as opposed to financing of a project
- Limited-recourse and non-recourse finance
- Origins of project finance
- Who uses project finance and why?
- What is the downside?
The Project Finance Process
- The Players and their interests
- Ownership structures
- Key project contracts
- Role of advisers:
- The financial feasibility study/debt structuring
- The information memorandum
- Debt underwriting/syndication
- Financial close
- Post-close monitoring
Sponsors and Lenders/ The Lender’s Risk Analysis
- Different risk/reward objectives of sponsors and lenders
- Balancing equity and debt
- Different types of debt – senior/ subordinated/mezzanine
- Structural & pricing drivers
- Key ratios – annual debt service, loan life and project life covers
- Balancing equity and debt
- Assessing the Risks
- Macro risks
- Completion risk
- Operational risk
Other Sources of Debt Finance / Risk Mitigation
- The bond markets
- Credit enhancement through guarantees
- Islamic finance
- Private political risk insurance market
- Export credit agencies
- Multilateral agencies/development banks
- Sponsor co-financing
Project Financing Documentation
- The term-sheet – purpose, legal status, binding/non-binding aspects
- Term-sheet/documentation provisions:
- Term-sheet interactive exercise
- Legal opinions
- LMA standard terms
- Security and credit rights
- Payment waterfall
- Collateral and assignment of contract rights
- Rights of the controlling classes, inter-creditor issues
- Reserve accounts, cash sweeps, profit distribution controls
- Refinancing risk
- Project types
- Conclusion
