Mastering Infrastructure Project Finance
Get to grips with the practical financial and structural issues surrounding infrastructure and other PPP/PFI Projects
Course Highlights
You will leave the course with a detailed understanding of:
- How lenders analyse infrastructure and PPP/PFI projects – from both a qualitative and a quantitative perspective
- How to examine the risks effectively and be prepared for the common obstacles that surround such projects
- How project financings are sized and tailored to the cash flow of a specific project
- The loan documents which govern a financing and how they interface with the other project documents such as concessions, EPC contracts, supply agreements and insurance arrangements
For details of the course trainer, please download the course brochure
Booking Information
| Dates | Prices | Book This Course | Discount |
|---|---|---|---|
| 02 - 04 Feb 2011 |
£ 2199 |
 |
-
|
Course Programme
THE PROJECT FINANCE "TOOLBOX"
Project Finance Essentials
- What is project finance – definition
- Differences between corporate & project lending
- The cash flow "envelope"; Cash Flow Available for Debt Service (CFADS)
- Why do sponsors choose project finance?
- The risk-reward relationship with the project – sponsors & lenders
Qualitative Risk Analysis
- Sponsor risk
- Country limits/country risk mitigation
- Construction/completion risk
- Technology risk
- Supply issues
- Offtake factors
- Operation & maintenance risk & structures
- Insurance issues
- Consents & approval matters/regulatory hazard
- Environmental & social issues
Debt Sizing & Sculpting
- CFADS – the starting point
- Cover Ratios
- Using the ADSCR
- Using the LLCR / PLCR
- Cover ratios in debt sizing & stress testing
- Base case design – control of inputs and macroeconomic parameters
- Sensitivity running – what does the banker test?
- The IRR/cover ratio interface
- Impact of control accounts on sponsor return
- Getting to the optimum debt level
Project Finance Loan Documentation
- Control accounts & the cash flow "waterfall"
- Types of control account – disbursement, revenue, compensation, debt service reserve & maintenance reserve accounts
- The cash flow waterfall – purpose, typical priority ranking and variations
- The documentation process
- Keeping it tight and focused
- The lender/borrower/counsel interface
- Different approaches to the term-sheet
- Designing the term-sheet for economy while covering the key commercial issues
- Documentary terms and conditions
- The "Boiler-Plate" – understanding the jargon
- The key "command & control" mechanisms in project finance agreements
- Conditions precedent
- Reps & warranties
- Covenants
- Events of default
- Borrower/sponsor needs and "hot-buttons" – what does everybody argue about most?
- Accessing the loan facility
- Pricing issues
- Operating flexibility & control
- Cash-traps & "IRR-Killers"
INFRASTRUCTURE & PPP PROJECT FINANCE – SECTOR PRACTICE
History of PPP/PFI
- Drivers for introduction
- "Off-Balance-Sheet"
- Private sector discipline/risk transfer
- Value for money
- PFI in the UK
- Development of the PFI process
- The PFI Model
- Impact of credit crunch
- The model exported – PPPs in selected international markets
Risk Features of Infrastructure Project Finance – Key Drivers for Debt Structure & Pricing, especially:
- Concession structure
- Legal & regulatory context
- Revenue basis – who takes the volume risk?
- Capacity/availability charge + operating charge?
- Shadow toll?
- Real toll/farebox basis?
- Sponsor risk – a range of motivations and drivers
- Operation & maintenance regime
- Termination
- By grantor
- For concessionaire default
- Force Majeure
Infrastructure P/F Models – debt models for roads/rail & light rail/airports/ports
- The classic models
- Debt/equity ratios and structures
- Debt maturity
- Debt pricing levels
- Repayment profile sculpting methodologies
- Key "command & control" features
- Drawdown control
- Servicing subordinated debt
- Dividend lock-ups
- Events of default ratio
- Security structures
- Third party agreements
- Other documentation features
- Representations & warranties
- Conditions precedent
- Undertakings
- Insurance arrangements
- The impact of credit crunch on the sector
The PFI/PPP Process/Regulatory and Public Sector Oversight
- The bidding process
- Interfacing with lenders during the tendering process
- Ongoing testing after financial close – availability requirements, performance standards and key performance indicators
- State involvement on refinancing
PPP/PFI Project Finance Models for Hospitals, Schools, Prisons and Waste Management
- The classic models
- Debt/equity ratios and structures
- Debt maturity
- Debt pricing levels
- Repayment profile sculpting methodologies
- Key "command & control" features
- Security structures
- Third party agreements
- Insurance arrangements
- The impact of the credit crunch
The Prospects for Project Finance in PPP/PFI & Infrastructure
KEY INFRASTRUCTURE/PPP FINANCING CONTRACTS – THE CONCESSION
As the instrument which embodies the rights and responsibilities of the grantor and the project company, as well as the mechanisms for "policing" the agreement, the concession is of particular importance for all parties to an Infrastructure/PPP financing. It is therefore worthy of particular study, especially as regards:
- Concessionaire responsibilities
- Grantor responsibilities
- Payment methods
- Penalty regimes
- Termination
- Relief & Force Majeure
KEY INFRASTRUCTURE / PPP FINANCING CONTRACTS – DIRECT AGREEMENTS
Direct Agreements are often hotly-negotiated – not least because they tie the non-bank counterparties into commitments they may be very reluctant to give. As such they merit particular analysis.
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