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Description

This course is made up of four separately bookable modules:

  • Module 1: Advanced Project Finance Workshop (4 days)
  • Module 2: Cashflow Modelling (1 Day)
  • Module 3: Financing Natural Resources: Oil, Gas and Mining Projects (2 Days)
  • Module 4: Infrastructure Finance and PPP (2 Days)

This 9 -day (11 inclusive of the weekend) Project Finance Academy 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 characteristic of the energy, oil and gas, mining, transportation, social services, water and sanitation and telecommunications businesses, attendees will be brought up to date on the very latest techniques and innovative approaches to structuring and funding projects.

The program is divided into four modules that may be attended in full or booked separately:

Module 1 conducted from days 1 to 4 comprises the program’s core. A rapid paced discussion of key aspects of project structures, at its conclusion participants will be able to break analysis into its component parts. They will have gained techniques for assembling market information, making qualitative judgments, developing key agreements and conducting thorough quantitative financial analysis of projects.

This module also identifies the many sources of finance and risk support available for projects. From bank markets, and bond issuance, to leasing and other foreign and local currency funding alternatives, it highlights their differences, requirements and investor concerns. Effective application of interest rate, currency and commodity derivatives is described.

It also pays careful attention to the many techniques for enhancing the terms of funding provided by official players like Export Credit Agencies, development banks and private risk insurers.

Module 2 builds on the foundation established in the first portion of the program. A day-long session, it gives participants a hands-on opportunity to build a cash flow model for an LNG facility using Excel-based software. At the conclusion of the segment participants will have a pro forma project model suitable for examining debt capacity and project return on investment.

Module 3 introduces elements unique to projects in the natural resource sectors: oil, gas and mining. Discussion and cases cover upstream oil and gas delivery as well as green-field and later phase mining projects. Approaches to equipment finance are highlighted, including Islamic alternatives.

Module 4 In the program’s final session participants will become familiar with the wide array of models for Public Private Partnerships (PPP) designed to link public sector financial resources and accountability with private sector discipline, expertise, and capital. They will look at approaches to ‘balancing risk’ among various stakeholders, creditors and guarantors of projects as well as policy objectives like ‘value for money” central to Sovereign and Sub-sovereign governmental decision-making. Case examples cover projects in transport, water, sanitation, social services and other infrastructure.

Agenda

Day 1

Themes: Structuring Projects and Creating a Security Package; In-depth Study of a Gas Processing Plant

Project Finance Overview

  • Current Challenges /Approaches
  • Who are the Players? Identifying and Allocating Risks
  • What Can Go Wrong?
  • Examples from the Energy Sector
  • Financing Infrastructure

Various Projects and Approaches to Risk Identification

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

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 Forecasting

  • Financial Modelling 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: Working With Cash Flow Modelling Software to Finance a Fertilizer Plant Participants break into small groups to prepare a case study that analyses a fertilizer project. A computer simulation will be used to model cashflows. Groups will present their solutions

Day 2

Themes: Documentation and Sources of Finance and Credit Enhancement; Financing Transportation Infrastructure

Case Discussion

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

Sources of Finance

  • Banks and the Current Club Loan Market
  • Syndicated Loan Financing
  • What Security do Banks Want?
  • Market Flex Clauses
  • Development Bank "A" and "B" Loans and Other Funding Sources
  • Inter-creditor Issues

Credit Enhancement Alternatives

  • 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 Effect on Electrical Supply
  • Fragmentation of Electricity Generation
  • Generating, Transmission, Distribution
  • Merchant Power Plants (MPPs)
  • Rating Agencies' Analytical Model

Case Study: Financing a Gas-fired Power and Desalination Facility 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: More Financing Sources and Structuring Considerations; Conventional and Renewable Power Project Transactions

Case Discussion

Using Capital Markets for Projects

  • 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

Leasing Applications

  • Leasing Applications in Projects
  • Evaluating Cost

Renewable Energy Projects

  • Growth of the Market and Various Types of Renewables
  • Compared to Traditional Fossil Fuel Burning Plants
  • Project Economics
  • What is Driving the Investment?
  • Government Incentives in Various Countries

Case Study: Financing a Utility Scale Solar Photovoltaic (PV) Facility

Participants will break into groups to work on a renewable power project. Case considers sector and specific project risks, including their allocation through contractual undertakings of various players. The mix of finance is discussed as well as accessing capital markets and rating agency considerations. Cash flow projections and resource probability estimates are central to analysis

Day 4

Themes: Natural Resources Projects Upstream, Midstream and Downstream Oil and Gas

  • Structure: Upstream, Midstream and Downstream
  • Hydrocarbon Basics: Geology, Reserves
  • Supply and Consumption
  • Oil Production: Process Depletion and Enhanced Recovery
  • Financing Structures: Balance Sheet vs. Limited Recourse
    • Field Development and Platform Types
    • Production Facilities
    • Building and Financing Pipelines
    • Refineries and Petrochemical Plants
    • LNG Facilities

Allocating Risk

  • Technology and Construction/Completion
  • Reservoir/Reserve Risks
  • Feedstock Risk
  • Sales and Off-take
  • Operation and Maintenance
  • Abandonment/Decommissioning
  • Environmental/Regulatory Issues
  • Country/Political Risk

Logistics and Transportation Financing

  • Logistics: Pipelines, Shipping, and Storage
  • Types of Tankers
    • AFRA Classes (Average Freight Weight Assessment)
  • ULCC to Tanker Lightering

Islamic Finance

  • Definitions, Principles, and Authoritative Sources
  • Structures: Murabaha, Istisna and Ijara
  • Examples of Petrochemical and Other Transactions

Case Study: Financing an Oil Rig Participants will break into small groups to prepare a case study concerned with equipment financing. A computer simulation will be used to model possible outcomes. Groups will present their solutions.

Day 5

Themes: Reserve and Off-take Evaluation; Mining Projects; Risk-Management with Derivatives Stages in Financing Natural Resources Projects

  • Exploration/ Geology/Drilling/Reserve Estimation
  • Reserve-based lending and Borrowing bases
  • Mezzanine Funding
  • Oil and Gas Reserve Categories (P1, P2, P3)
  • Common Measures: (Loan Life Cover Ratio (LLCR), Project Life Cover Ratio (PLCR), Reserve Tail

Case Study: Financing a Condensate Field Development Project Evaluating the security package and forecast cash flows for a condensate field. Structuring Approaches. Finding funding.

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

Mining Transaction Considerations

  • Special Issues
  • Single Asset Projects and Asset Depletion
  • Off-take Arrangements
  • Construction Issues and Engineering
  • Mine Operating Risk Environmental and Country Risk

Mining Case Study Structuring a sales contract to support project financing of industrial minerals project. Self-test

Day 6

Themes: Project Finance Modelling

Participants will spend a day building a model for a Liquified Natural Gas (LNG) project. They will test a limited-recourse financing package for debt capacity and attractiveness to investors. Discussion of common approaches to modeling with Excel, ‘dos’ and ‘don’ts’. Practical use of models for negotiations.

Modelling Workshop Overview: Objectives and Approaches

  • Constructing a Model / Common Myths
  • Variations by Project Type
  • Overview of LNG Plant and Major Contracts

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

Financing Section

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

Developing the Profit and Loss and Balance Sheet

  • Factoring in Reserves
  • Considering Currencies
  • Tax Calculations
  • Working Capital

Ratios and Sensitivity Analysis: Objectives and Limitations

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

Day 7

Themes: Reserve and Off-take Evaluation; Mining Projects; Risk-Management with Derivatives

Stages in Financing Natural Resources Projects

  • Exploration/ Geology/Drilling/Reserve Estimation
  • Reserve-based lending and Borrowing bases
  • Mezzanine Funding
  • Oil and Gas Reserve Categories (P1, P2, P3)
  • Common Measures: (Loan Life Cover Ratio (LLCR), Project Life Cover Ratio (PLCR), Reserve Tail

Case Study: Financing a Condensate Field Development Project

Evaluating the security package and forecast cash flows for a condensate field. Structuring Approaches. Finding funding.

Mining Transaction Considerations

  • Special Issues
  • Single Asset Projects and Asset Depletion
  • Off-take Arrangements
  • Construction Issues and Engineering
  • Mine Operating Risk
  • Environmental and Country Risk

Mining Case Study

Structuring contracts to support project financing of an industrial minerals project in an emerging economy. Critical application of Political Risk Mechanisms to reassure lenders and investors.

Day 8

Themes: Infrastructure Projects, PPP, and Transportation

What is a Public Private Partnership (PPP)?

  • Public Private Partnerships (PPP) Principles
  • Roles for the Public and Private Sector
  • Different Structures and Degrees of Private Participation
    • Contract Services: Operations and Maintenance (O&M), O&M and Management
    • Leasing, Lease Develop Operate (LDO), Lease Purchase, Sale Leaseback
    • Design Build: DB, DBM, DBO, DBFO, BOT, BOO Concessions
    • Privatization

PPP Tender Process

  • Specifying User Needs in Output Terms
  • Private Sector Informational Requirements
  • Identifying Bidders and Assessing Risks Negotiating Strategies and Closing

Sources of Finance: Managing and Allocating Risks in PPP; Making a Deal Bankable

  • Collecting Information/ Macro and Micro Concerns of Banks
  • Risk Allocation in PPP/ Developing a Specialized Matrix
  • Risk Mitigation Techniques
  • Analysing Risk Assumptions (Operating and Maintenance, Construction, Financial, Revenues)
  • Environmental Considerations
  • Consultants in the PPP Process

Quantitative Risk Analysis and Cashflow Forecasts

  • Requirements of Creditors vs Investors
  • Other Stakeholder Considerations
  • “Value for Money” and the Public Sector Comparator (PSC); Unitary Payments (UPs)

Case Study: Financing a Tollroad Participants will break into groups to evaluate the financing scheme for a toll road. They will assess the allocation of risks, and concession terms, and other contractual agreements. A cash flow model will be used to test qualitative assumptions.

Day 9

Themes: Financing Water, Sanitation and Other Social Services Projects

Case Discussion

Legal and Contractual Issues in PPP Projects

  • Regulatory Framework and Enforceability
  • Policy Objectives of the Government Concessions and Licensing,
  • Process and Oversight

Case Study: Reviewing a DBFO Term Sheet

Sources of Credit and Risk Support in International PPP Projects

Official Risk Enhancers and Development Banks Rating Agencies and Pension Fund Sales Accessing Local Capital Markets in Developing Countries

Case Study: Reviewing a DBFO Term Sheet for a Roadway or Other Transport

Water and Sanitation Infrastructure

  • Special Features of Water and Sanitation Projects
  • Array of Funding Structures for Service Agreements and Concessions
  • Who are the Players? Investors? Lenders?

Two Case Studies:

  • Financing a Water Treatment Plant

Participants will review the terms of a concession for a municipal wastewater treatment plant.

  • Non-revenue Water (NRW)

Understanding a service contract for reducing non-revenue water. Considering the merits of the proposed financing approach.

PPP and Social Infrastructure

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

Case Example: Financing a Hospital Self-test and Wrap-up

Who should attend

  • 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

Experts

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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