Project Finance Academy (Modular Course)

8 days 3-12 Jul 2017, London UK £7,995.00 + VAT* Download brochure Add to basket

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Overview

This 10-day intensive practical programme features everything you need to know about project finance

Featuring six highly interactive, individually bookable, modules

All workshops can be booked separately.

Course Outline

This unique project finance academy is designed as a modular 10-day course. The modules are separately bookable.

The overall course objective is to examine advanced techniques relevant in the current stressed global financial markets and to enhance your 'sector' skills in four key areas.

International case studies and best practices are discussed throughout, including the application and integration to public-private project financings.

Course Summary

The Annual project finance academy in London starts with a 4-day advanced project finance workshop which focuses on the core skills of risk analysis and structuring, with a special emphasis on political risk. Team case presentations neatly wrap together these skills along with the analysis and sensitivities of the team case-study Excel models.

Four 1-day courses then bring up-to-date sectors skills in Oil&Gas/LNG, power, mining, and infrastructure. Industry fundamentals are first covered together with the key metrics and due diligence issues alongside numerous case studies. International best practices are delivered comprehensively.

The legal aspects and the four methods of loan workouts are also given. Finally, the 2-day course on Building Project-Finance Models looks at the key financial ratios and credit analysis as well as the forecast basis for any cashflow projection. This course is designed as a 'Build-your-own-model-from-scratch' with the final model used in a course bidding contest!

These 6 course modules are highly interactive with many cases and recent examples referenced throughout to fully explore the world of project finance.

Supported by:

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
Richard Tinsley

The course director is the president of a global network of investment bankers, project advisors and industry specialists.

He has over 25 years of hands-on project finance experience, in both debt and equity. He has been the lead banker and chief advisor for some US$28.3 billion of project financing world-wide (in over 37 countries). He now specialises in the integration of political risk structures into BOO/ BOOT and independent power project financing.

He has pioneered a number of applications by cross-fertilising practices from one region or industry sector to another. He is a widely recognised author and expert on risk mitigation techniques in project finance structuring.

Now based in Sydney, Australia, he has worked at every level of international project financing, for institutions such as Continental Bank, a commercial bank in Chicago; European Banking Company, a consortium merchant bank in London; Prudential–Bache Capital Funding, a Wall Street investment bank in Australia and as the Project Finance Director of Indosuez Australia, now Credit Agricole.

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.

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.



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

Skip to the agenda for a specific module:


Module 1: Advanced Project Finance Workshop


Day 1


Best sectors and project types

  • Sector preferences in project finance and why
  • Difficult sectors to avoid
  • Which trends are current?

The reasons to choose project finance

  • Sponsor's rationale
  • Lender's criteria
  • Constructor's objectives
  • Government's role(s)
  • Institutions/investors

Project finance as an option

  • The completion test as the option exercise/risk transfer
  • The sponsor’s abandonment option
  • Risk-sharing on a default
  • The option value

Stages in project finance

  • Time, team, costs
  • Credit/approval memorandum
  • Impact when using ECAs/MLAs

Risk and structuring

  • The 7 risk systems
  • The 5 structuring formats
  • The 16 risks to identify
  • Operating
  • Cost
  • Technical
  • Management
  • Completion
  • Political
  • Infrastructure
  • Market
  • Environmental
  • Inputs
  • Sponsor
  • Force majeure
  • Foreign exchange
  • Engineering
  • Syndication
  • Interest/funding
  • Legal

The 81 structures to apply


Day 2


  • The 16 risks and structuring (continues)
  • Due diligence
  • How to scope the 6 independent reviews
  • Fit to investment/credit approval
  • The bankable feasibility study
  • The project development plan
  • Traffic studies
  • Role of advisor(s)
  • Different types of advisors
  • When to involve advisors
  • How to keep the costs down


Funding sources

  • Debt
  • Local currency
  • Cross-border/defeasance
  • Mezzanine
  • CPI-linked


Equity

  • Preference capital
  • Convertibles
  • IPOs/floats for projects


Leasing/Leveraged leasing

  • Commodity-based
  • Offtake contracts
  • Derivatives
  • Production payments


Capital Markets

  • 144A
  • ‘Commonwealth’
  • CPI-linked

Ratings for project financings

  • How to get one from Moodys / Standard & Poors/Fitch
  • How can project finance pierce the ‘sovereign ceiling’?

Why projects go wrong?

  • Will we ever learn (?) from:
  • Eurotunnel
  • Eurodisney
  • Orly VAL
  • Iridium
  • Dulles Greenway

Document structuring

  • The 19 participants
  • The 33 contracts
  • The 6 risk-documentation flowcharts

Contractual architecture – risk coverage

  • Concession agreements vs. BOO
  • Multiple BOO integration

Special purpose vehicles (The 5 types)

Operations/management (O&M) contracts

Turnkey construction contract

  • Delayed completion and systems performance insurances
  • Owner-controlled insurance program (OCIP)

Offtake/sales/throughput

  • Indirect/third-party support agreements
  • Comfort letters
  • Government guarantees

Dispute resolution methods

  • Expert-resolution
  • Arbitration
  • ADR

Funding documentation

  • Loan agreements
  • Joint venture/shareholder agreement
  • Security documentation
  • Assignment of contracts/insurances
  • Direct and common agreements
  • Offshore proceeds account
  • Inter-creditor agreement/deed of priority


Day 3

Team Red Cases: Top 4 Risks

Risk review: each team will make a brief presentation on the top four risks selected for four project finance cases (C.R.Tinsley, Project Finance in Asia Pacific: Practical Case Studies, 2002; 16 projects from which to select)

Credit review

The Investors’ Measures

  • Internal rate of return / yield
  • Payback: leveraged / unleveraged
  • Net present value
  • Earnings per share

The Financier’s Measures

  • Debt service covers: before / after tax
  • Loan life PV ratio
  • Reserve life PV ratio
  • Reserve ‘tail’

The Company Treasurer’s Measures

  • Liquidity / turnover
  • Balance sheet
  • Profit & loss
  • Return on capital / investment
  • Discount rates

Credit Analysis

  • Impact of leverage
  • Calculations for global coverage ratios
  • Calculate liquidated damages/overrun/retention requirements

Credit Factors

  • How to choose sensitivities
  • Key ratio targets
  • Contrast to sponsor’s IRR, NPV, valuation analyses

Political risk structuring

Definitions

Terrorist questionnaire

  • The classic three - nationalization, war, inconvertibility
  • The full set of 22
  • Application to equity too

Export Credit Agencies/Bilateral agencies

  • US Eximbank (Project Finance Division)
  • OPIC, USA
  • EDC, Canada
  • KfW/Hermes
  • ECGD, UK
  • JBIC/NEXI
  • EFIC
  • Sinosure
  • Tactics for approaching the ECAs

Multilateral Agencies

  • World Bank
  • Multilateral Investment Guarantee Agency (MIGA)
  • International Finance Corp (IFC)

How to Approach the Multilaterals

  • IFC “B” Loans
  • World Bank partial risk/credit facilities
  • Local currency facilities

Private PRI Sources

  • AIG
  • Sovereign


Day 4

Team roadshows: Four teams will be selected in advance by answering a questionnaire that will be emailed/faxed back to the course director. The teams will work on the cases during the duration of the course in break-out rooms. These four cases will be presented as ‘Roadshows’ on the morning of Day 4. The course director will give expert feedback on both the team presentation and the delegate questioning.

M3: This infrastructure/traffic case is one of the most advanced Project Financing ever done andincludes banks and bond funding. A detailed model assists in the financial analysis while team members need to justify the traffic assumptions and the overall structure. This brings together many course elements on credit, risk, structures, funding, and documentation. Why would banks ever give the bondholders pre-completion credit enhancement?

Louise: This BOT project pioneered the access to the 144A private-placement project-finance bond market. Heavy sponsor involvement achieved a remarkable deal; however, team members will have to find the strengths and weaknesses behind such sponsor commitment.

Zanda: This is a very high-leverage Project-Finance case which is notable for weak sponsor support. It will stretch the team’s understanding of political-risk structuring and credit analysis. Why is such a simple financial model acceptable in this case? A detailed risk-by-risk review will need to be analysed.

FMG: This project was able to raise US$2.05 billion before startup on the basis that the core project was US$400 million – the rest is infrastructure. Incredibly, this 144A capital raising includes US$ 889 million in standby/overrun facilities. Learn how the hedge funds catalysed this important deal.

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

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
  • Outlook

New horizons for projects and funding sources

  • Green funds
  • Emerging market funds
  • Tax structures
  • Infrastructure/development funds
  • Capital markets
  • Political risk enhancements
  • FX Cover

Credit Enhancements

  • Credit wraps/monolines
  • Islamic project finance

Credit derivatives

  • CDOs/CLOs

Takeout architectures

Case study: Croydon Tramlink, UK

Course conclusions




 

Module 2: Oil & Gas/LNG Project Finance

Day 5



Varied dimensions of petroleum project financing:

  • Field development (Upstream)
  • Platforms/production facilities
  • Pipelines/oil terminals
  • Refineries/petrochemicals
  • Coal/gas-to-liquids
  • LNG/regasification/shipping

How does the oil/gas/LNG/refining industrys’ cashflows work?

  • Converting reservoir engineering and the other 15 risks into cash flows
  • Reserve tail/PV loan life ratios

Case study: Indonesian LNG What are the bankers looking for in large scale syndications?

Reservoir engineering

  • Seismic studies
  • ‘Proven’ vs ‘Probable’ reserves
  • Production aspects

Special petroleum-industry project finance structures:

  • Production payments
  • Throughput agreements
  • Hedging/options
  • Royalty trusts
  • Securitisation
  • Tankers

Case studies:

  • Centragas: How can high-leverage pipeline infrastructure be funded in the capital markets and cover political risk.
    Ekofisk Pipeline: How far can a borrower push a throughput agreement?
  • Sasol Gas Pipeline: Field facilities enhance this project’s cashflows.
  • First International Petroleum Transport: How does Shell spin off six tankers onto the capital markets, firstly as a private placement then as a public issue?
  • Floating-Production-Storage-Offloading (“FPSOs”) Vessels: Novel financing techniques are required in this new financing sector.
  • Ras Laffan LNG: The world’s largest Project Finance bond issue at the time even given the political risks.
  • PNG LNG: Examine the tranches in this blockbuster deal. Sweet and sour - PFI?
  • Jubilee: How do borrowing bases work?
     



 

Module 3: Power Project Finance

Day 6


Power industry risk analysis

  • Technology and costs: Cogen, Cocycle
  • Heat Rates
  • Capex/MW
  • Degradation
  • Maintenance reserves
  • Availability
  • Fuel Costs
  • Emissions
  • Renewables
  • LNG
  • Stages in power financing
    - Concession/power purchaser
    - Tenders/unsolicited
    - Financing

Case study: Tejo Energia ("Pego"), Portugal. How can banks take 30 yr risk on a 12-year deal? What is a cash sweep?

Credit analysis

  • Coverage calculations
  • Reserve accounts
  • Liquidated damages

Case study: Petropower. How could such a ‘beside-the-fence’ project attract 100% LDs.

Renewable energy projects

  • Wind
  • Hydro/mini-hydro
  • Biomass
  • Wave
  • Solar/photovoltaics

Merchant power plants

  • Price fuel = f(price electricity)
  • Price gas=f(market)/reset
  • Fuel subordination
  • Anchor tenant/host
  • Energy conversion agreement
  • Lender friendly*
  • Cost curve
  • Other services
  • Portfolio
  • Traders

Case studies: Milford. How does this merchant deal handle ‘deemed dispatch’? What is the subordination structure?

Wind energy: Overcome the difficulties in fitting wind into the grid and the complexities of the renewables payment regimes.

Mine-Mouth power: How can the fuel supply be co-financed with the power plant?



 

Module 4: Infrastructure Project Finance

Day 7



Risk allocation for each sector

  • Highways/tollways/bridges/tunnels
  • Airports
  • Ports
  • Railways/undergrounds
  • Hospitals/prisons
  • Water/sewage

PPP infrastructure sectors of interest

  • Transportation
  • Communications
  • Social Services
  • Government/military Services

Traffic studies

  • Methods
  • Ramp-up
  • Due diligence
  • Urban mass transit

Case Studies:

N3 Tollway, S. Africa: The government traffic studies were flawed. Learn what the banks did to correct this problem.

Gautrain: Why this could never be a true Project Finance deal. What is the BEE aspect?

Superhighway BOO/BOT: How much of a real estate component should be counted in a tollway financing? Are the interchanges and corridor developments bankable?

Laem Chabang Port: How can banks achieve a full market-risk on such a project financing? How can FX risks be packaged? Are there technology aspects in the project forecasts?

Chengdu No.6 Water: Examine China’s first water supply BOOT with the imaginative structuring of EIB alongside ADB. The first time municipality risk was assumed (no central government counter-guarantee).

Contractor usage of project finance

  • Tender conditions
  • Delay/completion architecture
  • PPP ‘shell’ Special-Purpose-Vehicles (SPVs)
    - Insurances

Case Study: Croydon Tramlink
The PPP parties surely had the best shot at winning this concession. Learn why the tender overturned them?
 

Module 5: Mining Project Finance

Day 8



Which commodities to project finance?

  • Minerals to avoid

Stages in financing the minerals industry

  • Exploration
  • Development
  • Operations

Credit analysis criteria

  • Economic rent
  • Reserves
  • Capital Markets

Case studies:

Ranger Uranium, Australia:
How can banks provide US$55million as a rehabilitation guarantee to shut the mine down?

Industrial minerals: How to structure sales contracts to support a project financing?

Colowyo, USA: How does the capital markets judge a monetisation of coal supply contracts?

Reserves due diligence

  • Geology/drilling
  • Reserve estimation
  • Mining recoveries

Gold instruments

  • Commodity swaps.
  • Commodity-linked bonds.

Case Studies:

Yanacocha, Peru: Classic gold-mine receivables financing based on a 5-year reserve.
Iduapriem Gold Mine, Ghana: Find out how the gold fee works? Can subordinated debt work within a gold loan?


How Mine Project Finance Can Go Wrong

Case Studies:

Anaconda Nickel: How the capital markets can be used for development capital? How can a packaged project attract US$340million in fixed-rate debt? What was the cause for the 75% writeoff?
International Coal Financings: How the Project Finance Banks lost US$1 billion on Market Risk?

Political Risk Structures in Mining

Case Studies:

Ambatovy: Definitely a Deal-of-the-Year; a blockbuster assembly of political-risk structuring. The biggest so far.
Batu Hijau: A two-step financing weaving in KfW-Ipex, US Exim, and JBIC, plus the sponsors’ subordinated debt.
Newmont, Zarafshan: How to fit OPIC, MIGA, and EBRD together with a project financing?
Papua New Guinea: Examine the political-risk structures for all the mining projects, including Lihir.
Escondida: How to project finance without the banks?
Phu Kham: Combination of mezzanine debt and project finance within a commercial political risk package (not ECAs). Also wraps in some equipment-lease financing.
 

Module 6: Building Project Finance Models

Day 9



Credit and modelling

Project finance modelling objectives

  • Link to project finance’s 16 Risks
  • Model usage at different stages of project finance process
  • Liquidated damages

Project finance layouts

  • Conventional: operations; cashflows; loan/tax routines
    - Drawdown routines (%, quarterly, overruns, etc and the ‘split-year’ solution)
    - Amortisation Styles (linear, annuity/mortgage, and % dedication, and the six others)
  • Cofinancings: multiple tranches/maturities/payment priorities
  • Reserve accounts
  • Currency mismatches
  • Interest rates and inflation

Build logic into course model

  • Input sheet
  • Capex/construction
  • Revenues
  • Cashflows
  • Working capital
  • Opex
  • Equity
  • Reserves
  • Summary
  • Loan
  • Taxation
  • Debt service
  • P&L
  • Balance sheet
  • What-if?
  • Compliance
  • Macros
  • Log

Practical exercise: You will start to build your own project finance model from the information memorandum inputs. The special aspects of completion delays and overruns will be assessed in the first hands-on modelling then building the Capex sheet.

Project finance ratio analysis

  • Debt service cover ratio
  • Principal cover
  • Interest cover
  • Loan life PV ratio
  • PV ratios – project/reserve
  • Residual cover/cushion

Accounting ratios: profitability; efficiency; liquidity; etc.

Practical case study, you will:

  • Discuss the discrepancies in the many different definitions of these ratios
  • Discriminate among the 24 different versions of the DSCR
  • Examine these for the course project finance model you are building


Day 10

Sensitivities and bidding competition

The design and structure of financial models

  • Objectives
  • Flowchart
  • Modules
  • Menu and structure
  • Help
  • Testing

Practical exercise: You will audit the course model for errors using three different auditing techniques, including one not generally recognised within Excel. Another excellent non-Microsoft audit add-in is demonstrated.

Sensitivity analyses modelling

  • What if?
  • Other tricks?
  • Scenario analysis.
  • Breakeven.

Practical exercise: You will produce all the classic (deterministic and dynamic) sensitivities expected in Project Financing. The two Excel techniques are done as class/coursework as well as tips on the best ways to present the results graphically.

How to massage/finesse the model

  • Ratios
  • Loan amounts
  • Discount rates/leveraged IRR
  • Term
  • Reserves
  • Tax

Non-modelling inputs.
The key input assumptions can overwhelm the accuracy of any model. Six different information sources and approaches are outlined along with actual examples. How does each delegate keep up to date on the choices of input assumptions?

Practical exercise: Your task is to find at least three ways to improve the financing result from manipulating the course cashflow model.

Typical modelling errors

  • Discounting/escalation
  • Available cashflow
  • Working capital
  • Reserves
  • Replacement Capex
  • Residual value

Bidding contest using course project finance model.
The way to translate the modelling (bidding competition) results into the termsheet is the final aspect of the course. The winning team will defend its bid and show how the model achieved the winning result. The final course model itself is often used as a screening model by delegates after the course

Course summary and close

Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
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  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
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