Comprehensive course analysis
Who should attend
- Bankers/Investment Bankers
- Project Finance Modellers
- 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
About the course
Learn to analyse and model qualitative and quantitative project risks
This five day program is designed to help participants structure and evaluate project financing transactions. Reviewing examples of transactions selected from around the world, attendees will become familiar with the latest techniques and innovative approaches to funding a wide variety of projects. Sectors covered include oil and gas, energy, water, transport, and social infrastructure.
On the last day of the program participants will learn how to build a cashflow model for a project transaction.
Heavy emphasis is placed upon case studies. Pre-reading is mandatory and sent in advance. Home reading is expected each evening in preparation for the following day.
The program takes place over five days:
Day One: Sets the stage with a rapid paced discussion of key aspects of project finance structuring. Participants will learn to approach project financing requests by breaking the analysis into component parts. They will be given a roadmap for assembling market information, making qualitative judgments, developing key agreements and conducting thorough quantitative financial analysis. Elements specific to energy projects will be highlighted on Day 1 using a pipeline project.
Day Two: Continues the discussion from Day 1 and looking at midstream energy projects, including a gas processing facility used as a case study. Export Credit Agency Finance is part of the financing mix.
Day Three: Highlights debt provider considerations and compares bank lender requirements with those of capital market investors. Examples are used of power projects funded in both markets.
Day Four: Takes an in-depth look at funding transportation infrastructure including roads, bridges, ports, and airports. Case studies are used to demonstrate the special risks characteristic of projects that are exposed to potentially volatile market-based revenues. Participants also consider infrastructure traditionally funded by the public sector. E.g., schools, hospitals, courthouses, prisons etc. This final day includes a self-test as part of the course wrap-up.
Day Five: The program’s final day builds on the first four. Participants will look more closely at cash flow analysis of a project while constructing a model for an LNG facility. They will develop and assess a wide range of scenarios in order to test a limited-recourse financing package for debt capacity and investment suitability.
Day One Themes: Structuring Projects and Creating a Security Package; Efficient Sources of Finance
- How Have the Markets Developed? Where are the Projects?
- Array of Project Finance Approaches and Players
- Identifying and Allocating Risk
- What can go wrong?
- How Oil and Gas Projects Structure Led to Other Transactions
- Power, Combined with Water Desalination
- Renewable Energy
- Transport Projects
- PPP Approaches to Social Infrastructure
Projects and Risk Identification
- Risks in development
- Construction and operating risks
- Feedstock and supply
- Market risks
- Environmental risks
- Financial risks
- Political and regulatory
Case Example: Financing a Pipeline How is risk allocated? How are political considerations treated? What are key risks to creditors?
End of Day One
Day Two Themes: Legal Issues in Projects; Bank Debt and ECAs; Energy Sector
Legal Issues in Project Finance
- Legal environment and regulatory conditions
- Commercial points and legal points in various projects
- SPV Structures
- Key contractual agreements
- Developing a term sheet
- Limiting recourse
- Tax gross up issues
- Market interruption
- Reps and warranties
- Conditions precedent
- Covenants including MAC clauses
- Hedging requirements
Club Loans and Syndicated Loan Financing
- What security do banks want?
- Market flex clauses and “Mini-perms”
- Inter-creditor issues
- Credit Enhancement and Co-financing with ECAs
Case Study: Financing a Fertilizer Plant * Risk allocation among various project participants to finance and construct a 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? The role of Export Credit Agencies in the funding mix.
End of Day Two
Day Three Themes: Sources of Finance: Accessing Capital Markets
Accessing Capital Markets
- Comparing bond issuance to bank loans
- Nature of investors, timing and flexibility
- Project size and relative cost
- Security requirements
- Negative arbitrage issues
- Due diligence process / road shows
- Rating Agency Considerations
- Private Risk Insurers and Monoline Insurers
- Market forces and the effect on electrical supply
- Fragmentation of electricity generation
- Generating, Transmission, Distribution
- Merchant Power Plants (MPPs)
- Growth of the Renewables Market
- Project economics
- What is driving the investment?
- Government incentives
Case Study: Financing Electricity Generation * 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
End of Day Three
Day Four Themes: Transportation Projects and Other
Transport Projects and the Origins of PPP Structures
- Evolving Roles for the Public and Private Sector
- Different Structures and Degrees of Private Participation
- Outright and partial government ownership
- Long-term Concessions and DBFO
- Evaluating Market Risk
- Roads, Bridges, Airports, Ports and Other
Case Study: Airport, Port or Road Finance; Negotiating a Term Sheet * 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.
Other Social Infrastructure
- Financing Hospitals, Schools, Prisons, Others
- Concessions and Contract Terms
- Risk Evaluation and Allocation
- Monitoring Requirements
Case Example: Hospital Upgrade
End of Day Four
Day Five Theme: Cashflow Modeling for Projects
In this final day participants will build 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 investment suitability.
Cashflow Modeling Approaches
- Financial modeling and cash flow analysis
- The 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
Modeling Workshop Overview: Objectives and Approaches
- Constructing a Model / Common Myths
- Variations by Project Type
Structuring the Model / Acquiring Data to Create a Cashflow Statement
- Developing an Assumptions Page
- Volume and Pricing Considerations
- 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
- Equity First or Pro Rata
- Manually Designed Equity Subscription
- Draw-down of Debt Linked to Specific Contracts or Expenditures
- or in a Hierarchy
- Sculpting Debt
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
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 ...
Videos and materials
Read more about Negotiations
Read more about Project management
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