Advanced Project Finance Workshop

4 days 9-12 Jul 2018, London UK £3,645.00 + VAT* Download brochure Add to basket
4 days 26-29 Nov 2018, Hong Kong Hong Kong $5,790.00 Download brochure Add to basket

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Overview

This course represents module 1 of the Project Finance Academy.

Module 1 conducted from days 1 to 3 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 agreement and conducting thorough quantitative financial analysis of projects. This module further identifies the many sources of finance and risk support, from bank markets, to bond issuance, leasing and other foreign and local currency funding alternatives, highlighting their differences, requirements and investor concerns.  

Four Workshops That Can Be Booked Together or Separately:

This programme consists of four separately bookable modules, book the full Project finance academy and save £2535.

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

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

London
Meg Osius
The Course Director specializes in capital markets, risk management, and international project finance. She works with corporations, financial institutions, public agencies, law firms, and private equity investors. She has had extensive transactional experience in the oil, gas, power, transport, and telecom sectors.

She began her career at JP Morgan Chase Manhattan Bank, where she structured highly leveraged deals and project financings also advising clients on foreign exchange and other price risk management strategies. Before that she was responsible for evaluating the quality of the bank’s global loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout and distressed debt.

She has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her articles on approaches to financial analysis in emerging markets.

Previously she was Chairperson of the Technical Advisory Panel (TAP) of the Public Private Infrastructure Advancement Fund (PPIAF) managed by the World Bank. The fund provides technical assistance to emerging market governments in order to encourage private involvement in infrastructure development. She is currently a Director of British Caribbean Bank and Waterloo Holdings Ltd. She received an M.B.A. from INSEAD, the European Institute of Business  Administration, in Fontainebleau, France. Her B.A. degree is from Princeton University.
Hong Kong
Margaret Osius

The Course Director specializes in capital markets, risk management, and international project finance. She works with corporations, financial institutions, public agencies, law firms, and private equity investors. She has had extensive transactional experience in the oil, gas, power, transport, and telecom sectors.

She began her career at JP Morgan Chase Manhattan Bank, where she structured highly leveraged deals and project financings also advising clients on foreign exchange and other price risk management strategies. Before that she was responsible for evaluating the quality of the bank’s global loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout and distressed debt.

She has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her articles on approaches to financial analysis in emerging markets.

Previously she was Chairperson of the Technical Advisory Panel (TAP) of the Public Private Infrastructure Advancement Fund (PPIAF) managed by the World Bank. The fund provides technical assistance to emerging marketThe Course Director specializes in capital markets, risk management, and international project finance. She works with corporations, financial institutions, public agencies, law firms, and private equity investors. She has had extensive transactional experience in the oil, gas, power, transport, and telecom sectors.

She began her career at JP Morgan Chase Manhattan Bank, where she structured highly leveraged deals and project financings also advising clients on foreign exchange and other price risk management strategies. Before that she was responsible for evaluating the quality of the bank’s global loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout and distressed debt.

She has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her articles on approaches to financial analysis in emerging markets.

Previously she was Chairperson of the Technical Advisory Panel (TAP) of the Public Private Infrastructure Advancement Fund (PPIAF) managed by the World Bank. The fund provides technical assistance to emerging market governments in order to encourage private involvement in infrastructure development. She is currently a Director of British Caribbean Bank and Waterloo Holdings Ltd. She received an M.B.A. from INSEAD, the Eur governments in order to encourage private involvement in infrastructure development. She is currently a Director of British Caribbean Bank and Waterloo Holdings Ltd. She received an M.B.A. from INSEAD, the European Institute of Business  Administration, in Fontainebleau, France. Her B.A. degree is from Princeton University.

Venue

London

Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Hong Kong

4-5 Star Hotel in Hong Kong

All of our courses are held in 4 – 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.

Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. Course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.

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We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

Agenda

Agendas are localised, please select your preferred location.

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

Sector Considerations

  • Ownership Structure
  • Outright and Partial Government Ownership
  • Long-Term Concessions and PPP structures like DBFO
  • Privatization of Seaports; Airport Financing

Exercise: Constructing a Risk Matrix for a Transport Project
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. Also, rating agency considerations in evaluating the proposed financing structure.

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

Case Examples: Colombia and Brazil

Conventional and Renewable Power Projects

  • Market forces and the effect on electrical supply
  • Fragmentation of electricity generation
  • Gencos/transcos/discos
  • Merchant power plants (MPPs)
  • Rating agencies' analytical model
  • Various types of renewable energy projects
  • Comparing renewable to traditional fossil fuel burning plants 
  • Government incentives for renewable energy projects

 
Case Study: Financing a Gas-fired Power Plant
Risk allocation among various project participants in a gas-fired cogeneration electricity and water desalination plan. Testing the project's cash flows under varying scenarios with a cash-flow simulation model. What are acceptable DSCR levels?  Equity returns?
Self-test

Day 1


Critical factors in project financing today

  • Why choose project finance?
    • Sponsor’s rationale
    • Lender’s criteria
    • Constructor’s objectives
    • Government’s roles
    • Institutions/investors
  • Best sectors and project types
    • Difficult sectors to avoid
    • Current trends
  • Stages in project finance
    • Time, team, costs
    • Information memorandum/project proposal
    • Credit/investment committee considerations

Workshop: case study/modelling team assignments

    • Power project – capital markets
    • Tollway – banks/bond
    • Oil and gas – political risk
    • Mega-Infrastructure/ResourceS
  • Risk definitions/allocations
    • The 6 risk systems
    • The 5 structuring formats
    • The 16 risks to identify
    • The 184 structures to apply
  • Sector-specific risk profiles and structuring protocols
    • Oil and gas
    • Tollways/bridges/tunnels
    • Power/merchant power railways
    • Ports/airports
    • LNG/Shipping
    • Water/waste water
    • Hospitals/prisons
    • Telecoms/satellites
    • Mining/metals
    • Renewable energy

Workshop: pick the risks; each team will select the top four risks and the structures that are needed in four recent cases.

  • Risk ‘metrics’
    • Basel II
    • Compliance measures

Day 2


Structuring and trade-offs

  • Due diligence
    • How to scope the 7 independent reviews
    • Fit to credit/investment approval
    • The “bankable” feasibility study
    • The project development plan
  • Why do projects go wrong? Lessons to be learnt from:
    • Eurotunnel/Eurodisney/Iridium
    • OrlyVAL/Dulles Greenway/NCA/Quintette
  • Key documentation aspects
    • The 19 participants
    • The 33 contracts
  • Contractual architecture – risk coverage
    • Concession agreements vs. BOO
    • Special purpose vehicles (the 5 types)
    • Operations/management (O&M) contracts
    • Turnkey construction contract
    • Delayed completion and systems performance insurances
    • Offtake/sales contracts
    • Indirect/third-party support agreements
    • Government guarantees
    • Dispute resolution methods
  • Funding documentation
    • Loan agreements
    • Joint venture/shareholder agreement
    • Security documentation
    • Assignment of contracts/insurances
    • Direct and common agreements
    • Offshore proceeds account
    • Swaps
    • Securitisation
    • Inter-creditor agreement/deed of priority
  • Funding sources
    • Debt
    • Equity
    • Leasing/leveraged leasing
    • Commodity-based
  • Ratings for project financings
    • Moodys/Standard & Poors/Fitch
    • Key differences with bank-driven deals
    • Covenants
    • Pricing
    • Default
    • Term
    • Structure
    • Voting
  • Role of the advisor
    • When to involve advisors
    • How to keep the costs and timetable down
  • Political risk structuring definitions
    • Terrorism questionnaire
    • The ‘classic’ 3 - war, inconvertibility, expropriation
    • The full set of 20 political risks
    • Application to equity too
  • Export credit agencies/bilateral agencies
    • US Eximbank/OPIC, US
    • EDC, Canada/KfW-Ipex/Hermes/ECGD, UK/JBIC/NEXI
    • Tactics for approaching the ECAs
  • Multilateral agencies
    • World Bank
    • Multilateral Investment Guarantee Agency (MIGA)
    • International Finance Corp (IFC)
    • European Bank for Reconstruction and Development (EBRD)
    • Inter-American Development Bank (IDB)
    • Asian Development Bank (ADB)
    • How to approach the multilaterals
  • Private sources
    • AIG
    • Sovereign

Day 3


Credit criteria and cashflow modelling

  • Credit analysis
    • The investors’/financier’s/company treasurer’s measures
  • What model is needed for a project finance?
    • The model layout
    • Establishment of the key cases
    • Fit to the project risks/sensitivities
    • "Circularity is best"
  • Model designs
    • Design of the input sheet/data validation
    • Conventional: operations; capex; loan/tax routines
  • Project finance model types
    • Typical layouts
    • Drawdown routines/model periods (%, quarterly, overruns)
    • The 8 main repayment styles
    • Multi-tranche approaches
    • Reserve accounts
    • Debt service
    • Maintenance
    • Capex
    • Tax
    • Environmental
    • FX
    • Calculating liquidated damages/overrun/retention requirements
  • Sensitivity analyses modelling
    • How to choose sensitivities
    • Key ratio targets
    • Contrast to sponsors' IRR, NPV, valuation analyses
    • Dynamic what if?
    • Scenario manager
    • Graphical sensitivity techniques
    • Conditional formatting
    • Other tricks?
  • Build the course model
    • Design the necessary input sheet
    • Determine the loan amount required using different repayment techniques
  • Model auditing
    • 'Straight' Excel techniques
    • Advanced add-in styles

Day 4

Modelling project finance cashflows

  • Key inputs
    • Non-modelling assumptions
    • Cyclicality
    • The 5 breakeven techniques
  • Modelling key decision/credit criteria
    • Leveraged IRR
    • Annual debt service cover ratio
    • Principal cover
    • Loan life/project life PV ratio
    • Interest cover
    • Cash/equity lock-ups
    • Delay algorithms
    • Residual cover/cushion/ratios
    • Liquidated damages
    • Cash sweeps/mandatory prepayments
  • Modelling workshop
    • Modelling tactics
    • How to fiddle/finesse the model
  • Typical modelling errors
    • Discounting/escalation
    • Available cashflow
    • Reserves
    • Working capital
    • Replacement capital
    • EBITDA
    • CPI-based LLR/PLR
    • The danger of using unescalated models
    • Some handy tools to check model imputs
  • Sector modelling aspects
    • Power
    • Tollways
    • Telecoms
    • Satellites
    • Prisons/hospitals
    • Airport/ports
    • Water/waste water
    • Theme parks/stadiums
    • Railways
    • Resources

Bidding contest using the course model - leading from the course model and the information memorandum update, decide whether you can improve on the currently offered project finance deal!

Day 5

Outlook for project finance

Case study presentations: each team presents its allocated case with structures and solutions as well as cashflow sensitivities. Expert feedback on the deal architecture and risks.

  • Project finance as a competitive tool
    • How to integrate project financing into the bid

Practical case study: linking the tariff to the project finance structure

  • Contract/tender bidding
    • “Real” turnkey construction contracts
  • Public private projects
    • The 7 variations
    • Tendering criteria
    • Trends/case examples
  • New horizons for projects and funding sources
    • “Green” funds
    • Emerging market funds
    • Infrastructure/development funds
    • Tax structures
    • Capital markets
    • Political risk enhancements
    • FX cover
    • Credit enhancements
    • Credit wraps/monolines
    • Weather/wind derivatives
    • Islamic project finance
    • Credit derivatives
    • Securitisation
    • CDOs/CLOs
    • Takeout architectures

Course summary & close

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