Mastering Project Finance Documentation Training Course

Over three highly practical days you will benefit from in-depth training in:

• The contentious issues for sponsors, lenders and other counterparties
• Construction contracts (fixed-price turnkey, cost-plus and others)
• Feedstock and fuel supply agreements
• Offtake / Sale agreements – "take-or-pays" and marketing agreements
• Operating and maintenance contracts
• Insurance agreements
• Key security documentation

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The programme for this course has been developed with in-depth support and advice from legal counsel with wide experience across the whole spectrum of project financing practice. The training therefore rests on a sound foundation of legal knowledge. The delivery of the training has however been designed very much with ease of assimilation in mind, as well as a focus on materiality and the practical needs of lenders, borrowers and other counterparties.

Rather than using a "page-turning" approach, the course makes extensive use of diagrams and mind-maps so as to:

• facilitate the recognition of key issues;
• identify the inter-relations between the parts of a particular document;
• make clear the links to other documents within a given financing structure.

As well as supporting the training course, the diagrams will also act as a useful and condensed source of future reference for participants.

Financing Documentation

• The documentation process
  - Keeping it tight and focused
  - The interface with legal counsel
• Different approaches to the term sheet – "back of a menu" or practically a loan document?
• A term-sheet checklist for Lenders – designing the term-sheet for economy while covering the key commercial issues
• Borrower/Sponsor needs and "hot-buttons"
  - Accessing the Loan Facility
  - Structuring the equity injection to optimise IRR
  - Accessing return during the operating phase:
         * The "Cash flow Waterfall"
         * Control Accounts – Debt Service Reserve & Maintenance Reserve Accounts
         * Distribution Lock-Ups
         * Target Repayment Schedules & Cash Sweeps
  - Factors impacting operating / financial flexibility
         * Reps & Warranties
         * Covenants/Undertakings
  - Events of Default

Security Documentation

• Lender security-taking objectives
  - Maintaining priority/defeating the "pari passu" principle
  - Maintaining value
  - Limiting dealings
  - Negotiating strength
  - Enforcement/disposal
• Key security instruments
  - Guarantees & Indemnities
  - Bank Guarantees & Performance Bonds
  - Pledges
  - Mortgages & Charges
  - Assignments
  - Security over Shares
  - Credit Balances
  - Direct Agreements

Project Documentation

• Construction contracts
  - Contract types – cost-plus, fixed-price turnkey, construction consortia
  - Bankability issues
  - Fixed-price turnkey contracts in theory and in practice
  - Liquidated Damages
  - Contract Bonding
  - Force Majeure & relief provisions
• Operation & maintenance agreements
  - O&M options – SPV-operated vs. third-party operators
  - Bankability factors
  - Operator obligations and liabilities
  - Mobilisation arrangements
  - Incentive/Penalty provisions
• Supply/Offtake agreements
  - Provisions of Send-or-Pay/Take-or-Pay contracts
  - Gas sales agreements
         * Contract Quantities – ACQs, DCQs
         * Nature of take-or-pay obligations
         * Delivery rates
         * Gas quality
         * Pricing methodologies
  - Power sales agreements
         * PPAs including capacity and energy charges
         * Tolling Agreements
• Insurance Agreements
  - Construction phase insurances
         * Contractor's all risks
         * Marine cargo
         * Delay in Start-Up
  - Operating phase insurances
         * All risks
         * Business interruption
  - The "Banker's Clauses" – relevance for the borrower and lender
  - Sabotage & Terrorism insurance
  - Political Risk insurance
• Concession Agreements
  - Types of concession contract
  - Requirements for bankability
  - Availability & performance charges
  - Development of PPP/PFI agreements
  - Force Majeure
  - Relief clauses
  - Termination clauses
  - Compensation

Case Studies

Day 1 culminates in a mock negotiation case study around a detailed financing term-sheet with participants taking the roles of lenders or sponsors/borrowers.

During Days 2 and 3 regular short case studies will be used – on an individual and group-work basis – to reinforce learning during the "taught" sessions.

This course will  equip project finance team members with a deeper knowledge of:

• Project and financing documents’ core structure and key variants
• The issues which are likely to be most contentious in the discussions between sponsors, lenders and others

This course is also a valuable element in the training and development of sponsor-side negotiators and financial advisers from investment banks, accounting firms and commercial bank advisory teams. Because a lender’s appetite for risk acceptance and the provision of high levels of debt will be a key factor in the success of a project financing. Borrowers and financial advisers have a keen interest in understanding what makes a particular agreement “bankable” and capable of supporting high earning. Legal firms may also wish to consider the course as means of sensitising staff to the particular issues of project financing documentation.