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About the course

Learn about project financing transactions & funding projects

This five-day Project Finance Training Week is designed to assist bankers, private investors, project developers, equipment suppliers, official creditors, and other project participants in acquiring all the skills they will need to evaluate project financing transactions in a wide variety of industrial sectors. Relying heavily on examples from around the world, attendees will be brought up to date on the very latest techniques and innovative approaches to structuring and funding projects.

## Agenda

### DAY 1

Themes: Structuring Projects and Creating a Security Package; Oil and Gas Structures

Project Finance Overview

  • Current challenges in Southern Africa for project finance
  • Who are the players?
  • Identifying and allocating risks
  • What can go wrong?

Examples: Financing a pipeline, tankers; other oil and gas projects

  • PPP and project finance: financing infrastructure
  • BOO, BOT, BOOT, DBFO and other approaches
  • Private investment in public infrastructure

Examples: Power projects and toll roads.

Projects and Risk Identification

  • Risks in Development
  • Construction, and Operating Risks
  • Feedstock and Supply
  • Market Risks
  • Environmental Risks
  • Financial Risks
  • Political and Regulatory Risks

Examples: Gas field development and infrastructure, oil refineries, LNG, Electricity plants.

Sources of Finance: Financing Checklist

  • Domestic and Foreign Banks
  • Bond Markets
  • Development Banks, ECAs and Other Official Creditors
  • Leasing
  • Islamic Finance
  • Sources of Equity

Cashflow Modelling Approaches

  • Financial Modeling and Cash Flow Analysis
  • View of Lenders: DSCR and PV Coverage
  • Equity Considerations: IRR and NPV
  • Approaches to Evaluating the Cost of Capital
  • Project Returns vs. Equity Returns
  • Forecasting Techniques and Limitations
  • Probabilistic vs. Non-Probabilistic Model-Building

Case Study: Financing a Gas Processing Plant

Participants break into small groups to prepare a case study that analyzes a fertilizer project. A computer simulation will be used to model cashflows. Groups will present their solutions.

DAY 2

Themes: Legal Issues; Bank Finance; Export Credit Agencies; Power Markets

Legal Issues and Documentation

  • Legal Environment and Regulatory Conditions
  • Commercial Points and Legal Points in Various Project Structures:
  • Incorporated and Unincorporated Joint Ventures
  • Partnerships and Limited Partnerships
  • Key Contractual Agreements and Structuring Considerations
  • Developing a Term Sheet
  • Limiting Recourse
  • Tax Gross Up Issues
  • Market Disruption Provisions
  • Reps and Warranties
  • Conditions Precedent
  • Covenants Including MAC Clauses
  • Hedging Requirements

Export Finance Techniques (ECAs)

  • Guarantees and insurance vs. funding
  • Buyer and supplier credits
  • Bank incentives inherent in ECA programs
  • Costs and availability
  • Securitization of ECA guarantees
  • Choosing a special purpose vehicle

Liberalizing Power Markets

  • Market forces and the effect on electrical supply
  • Fragmentation of electricity generation
  • Generating, Transmission, Distribution
  • Merchant Power Plants (MPPs)
  • Rating Agencies' analytical model

Renewable Energy Projects

  • Growth of the market and various types of renewable energy projects
  • Comparing renewable to traditional fossil fuel burning plants
  • Project economics
  • What is driving the investment?
  • Government incentives in various countries

Case Study: Financing a Gas-fired Power Plant Risk allocation among various project participants to finance and construct a power plant. Testing the project's cash flows under varying scenarios with a cash-flow simulation model. What are acceptable DSCR levels? What returns does equity look for?

DAY 3

Themes: Bank Markets; Development Banks; PPP for Transportation and other Infrastructure Projects

  • Club Loans and Syndicated Loan Financing
  • What security do banks want?
  • Market flex clauses and “Mini-perms”
  • Inter-creditor issues

Roles for Development Banks and Agencies

  • World Bank Group
  • Regional Multilateral development banks (Asian Infrastructure Investment Bank, Asia Development Bank, Africa Development Bank, EBRD, EIB, Inter-American Development Bank, Islamic Development Bank, Others)
  • Bilateral agencies (FMO, DEG, OPIC, Proparco, etc.)

Islamic Structures

  • Murabaha, Istisna, Ijara and Sukuk in Projects
  • Examples: Petro -Rabigh

PPP: Roads, Railroads, Airports, Ports and Other Transportation Projects

  • Public Private Partnerships (PPP) Principles
  • Roles for the Public and Private Sector
  • Different Structures and Degrees of Private Participation
  • Outright and partial government ownership
  • Long-term concessions and DBFO
  • Privatization of seaports; airport financing

Exercise: Constructing a risk matrix

Case Study: Airport finance; Negotiating a term sheet.

Participants will break into groups to work on this PPP project structure. Discussion will focus on project risks, their allocation through contracts, the mix of financing, cash flow projections, as well as rating agency considerations in evaluating the proposed financing structure.

DAY 4

Themes: Capital Markets; Risk Management with Derivatives, PPP for Water and Other Infrastructure

Using Capital Markets

  • Private placements and Eurobond issuance for projects
  • Comparing bond issuance to bank loans
  • Nature of investors, timing and flexibility
  • Project size and relative cost
  • Security requirements
  • Negative arbitrage issues
  • The due diligence process / road shows
  • Rating agency considerations
  • Private risk insurers and Mono-lines

Price Volatility and Risk Management with Derivatives in Projects

  • Financial price movements today: volatility and risk
  • Commodity-linked derivatives and securities
  • Using interest rate and currency swaps to manage risk in projects
  • Options: caps, floors and collars

Water Infrastructure

  • Special features of limited recourse projects in water and sanitation
  • Array of structures: Service Agreements Leasing, BOT, Privatization
  • Who are the players? Investors and lenders?
  • Desalination and electricity projects
  • Case examples and PPP transactions

Case Study: Water Treatment facility

Participants will break into groups to prepare a case study concerned with financing a wastewater treatment plant.

Social Infrastructure

  • Financing Hospitals, Schools, Prisons, Others
  • Concessions and Contract Terms
  • Risk Evaluation and Allocation
  • Monitoring Requirements

Self-Test

Day 5

Themes: Oil, Gas and Cashflow Modeling

Participants will spend a day building a model for an LNG facility. They will assess a wide range of scenarios in order to test a limited-recourse financing package for debt capacity and suitability for investment. With discussion of common approaches to modeling with Excel, “dos’ and ‘don’ts” as well as the practical use models for negotiations.

Modeling Workshop Overview: Objectives and Approaches

  • Constructing a Model / Common Myths
  • Variations by Project Type

Structuring the Model and Organizing the Data to Create a Cashflow Statement

  • Developing the Assumptions Page
  • Construction Costs and Timing
  • Operating Cost, Plant Capacity Usage, Fixed and Variable Costs
  • Reinvestment, Plant Expansion, Productivity Shifts

Developing the Profit and Loss and Balance Sheet

  • Factoring in Reserves
  • Considering Currencies
  • Tax Calculations

Financing Section

  • Equity First or Pro Rata
  • Manually Designed Equity Subscription
  • Draw-down of Debt Linked to Specific Contracts or Expenditures or in a Hierarchy

Ratios and Sensitivity Analysis: Objectives and Limitations

  • Measuring Debt Capacity and Investor Return
  • Using Modeling Output for Initial Project Vetting
  • Supporting on-going Negotiations

Summary and Wrap-up of Modeling Workshop

Who should attend

The courses will be of value to professionals in the following areas:

  • Bankers/Investment Bankers
  • Project Finance Modelers
  • Financial Advisors
  • Sponsors/Project Joint Ventures
  • Project Developers
  • Government/PPP Agencies
  • Public Sector Managers
  • Export Credit Agencies
  • Multilateral Agencies
  • Accountants/Taxation Advisers
  • Financial Analysts
  • Share market Analysts/Brokers
  • M&A/Buyout Specialists
  • Privatization Executives
  • Company Treasurers/Directors
  • Credit Committee Staff
  • Rating Agencies
  • Project Managers/Engineers
  • Project Consultants
  • Investment/Portfolio Managers
  • Insurance Advisers/Brokers

Trust the experts

Meg Osius

Ms. Osius designs and delivers executive level training sessions as well as providing consulting services to a wide variety of organizations worldwide. Specializing in international project finance, capital markets, and risk management, she works with corporate investors, private and development ...

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