MASTER CLASS
An overall view of the concepts and approach used in structuring and arranging project finance transactions for major infrastructure schemes in the Africa and overseas.
Who should attend?
This course will be of benefit to those working within, or intending to move into, project development or project finance areas. Previous participants have included engineers, bankers, accountants, lawyers and middle/senior managers in utility companies, commercial banks, consultancy and law firms.
What you will gain
- An overview of the concepts and approach used in structuring and arranging project finance transactions for major infrastructure schemes
- An understanding of risk analysis and risk management technique
- A project appraisal methodology
- An understanding of the language and approach of financiers
- Insight into the drivers, approaches and concerns of the key players involved in creating and financing major projects
- A focus on finance and the tools to value a project
PROGRAMME OUTLINE
1.0 Introduction and overview of project finance
- Definition of project finance
- Project finance as opposed to financing of a project
- Limited-recourse and non-recourse finance
- Main features of project finance
- Parties involved – interests and roles
- Importance of cash flow
- Documentation – what are the aims?
- Project development process
- Why choose project finance
2.0 Project finance market
- Origin and evolution of project finance
- Project finance figures: Global comparisons Europe, Americas, Asia and Pacific, Africa and Middle East; oil and gas, power, infrastructure, mining, telecom
3.0 The main parties in a project finance
- Parties involved – interests and roles
- Project company/borrower
- Sponsors/shareholders
- Banks
- Multilateral and export credit agencies
- Insurers
- Construction companies
- Operator
- Host government
4.0 Risks and mitigants:
- Understanding the risk allocation
- Country and political risks
- Industry risks
- Project risks
- Environment risks
- Construction risks
- Offtake – sales and supply risks
- Contractor risks
- Operator risks
- Funding risks
- Foreign exchange – currency and Interest rate risks
5.0 Credit analysis by the lenders
- How do lenders assess projects
- Assessing credit worthiness
- Getting started with credit
- Business/commercial risk
- Risk evaluation framework – developing a methodology
- Macro – country – political
- Industry products / market suppliers / contracted purchases
- Project production facilities/infrastructure / technical/contractors
- Management – project’s sponsors
6.0 The financial statements
- Balance sheet and leverage
- Income statement and cash flow
- Ratios ratings
7.0 Advanced cash flow analysis
- Net operating cash flow
- Free cash flow
- Discounted cash flow
8.0 Structuring a project finance
- Cash flow analysis
- What do we want from a model?
- Repayment profiles and coverage ratios
- Key management concerns with models
- Key project finance ratios: sponsors’ perspective
- Investors – gearing benefits
- IRR –the internal rate of return
- NPV –the net present value
- Key project finance ratios: lenders’ perspective
- CADS–cash flow available for debt service
- DSCR– debt service cover ratios
- PLCR – LLCR – project and loan life cover ratios
9.0 Financial projections
- Why are the financial models used?
- Volatility
- What is the project and why should it take place?
- What are the key operating assumptions?
- The financial modelling assumptions: construction cost, operation: revenues, expenses, taxes, financing: debt / equity
- Cash flow : CADS – DSCR / NPV – IRR
- The projection cases
- Appropriate debt and equity financing
10. The documentation
- Shareholder / sponsor arrangements
- Project documents
- Legal and structuring issues
- Seniority, senior debt, junior debt , equity
- Cash flow waterfall
- Guarantees / securities / covenants
- Loan documentation
No prior knowledge of project finance or finance is assumed.
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