School Of Project Finance

The flagship programme in our project finance training porfolio. This highly intensive, residential course has been designed to provide today's project finance professionals with the skills and knowledge to reach the pinnacle of modern project financing. By utilising a practical case study approach to project finance training, the course helps bridge the gap between theory and practice with excellent results. 

Course Highlights

For details of the course trainer, please download the course brochure

Booking Information

Dates	Prices	Book This Course	Discount
29/Nov - 03/Dec 2010	£ 4999		-
28/Mar - 01/Apr 2011	£ 4999		-
11 - 15 Jul 2011	£ 4999		-
28/Nov - 02/Dec 2011	£ 4999		-

Course Programme

DAY 1

How Project Finance Differs from Conventional Finance
Project finance, or limited recourse financing, has features which render it quite different from 'normal financings', and these differences permeate throughout the structure.

• The limitation of recourse
• The due diligences required
• The choice of entity as the SPV
• The role of the project cash flow model
• The significance of debt risk vs. commercial risk
• The role of contract in limited recourse financings
• The role of security in limited recourse financings
• The rationale for selecting project finance 

Contracts and Cross-Border Enforcement
The cross-border, SPV, and time-sensitivity features of most project financings create a challenge for the many contracts involved in the project. Litigation is not the answer.

• Local law and the conflict of laws
• The problems of contractual litigation in limited recourse financings
• Dispute resolution - typical structure and procedure
• Arbitration and the NY Convention 

PPP and Infrastructure Projects
Because most PPPs and BOTs have a contractually-based revenue, their structure and characteristics are quite different from other project financings.

• PPP projects contrasted with industrial/extractive industry projects
• The motivations and objectives behind PPPs
• The procedure for implementing a PPP project
• Public sector procurement
• The structure of concession agreements
• Parallels between PPP and BOT 

CASE STUDY 1: PPP Transport Project

Pre-Completion
Getting a project built and working as planned is the hardest and therefore the highest risk phase of most projects. Particular care is required in structuring the rights and obligations.

• Standard form contracts – FIDIC, ICE, JCT
• Liquidated damages
• Performance bonds and retentions
• Fixed price, lump sum, liquidity
• Variation and change orders
• Turnkey EPC structures
• Completion guarantees, refinancing risk 
• Technology, logistics, and learning curve risks

DAY 2 

CASE STUDY 2: Power Project – developed market 

CASE STUDY 3: Power Project – emerging market 

Market and Operating Risks
Most projects have only one revenue source. The cash flow coming into the project needs careful structuring and due diligence.

• The range of contracts encountered, and the features
• Availability risk vs market risk
• Take-or-pay agreements
• Hidden recourse structures
• Exclusions
• Implications of market volatility
• Cost-plus revenue projects 

CASE STUDY 4: LNG Project 

Project Cash Flow and Debt Structuring
Total dependence on a single cash flow results in structures and covenants that are not found in other financings.

• Risk – solvency risk vs volatility risk
• Free Cash Flow – why is it fundamental to analysis
• Cash management issues
• Liquidity – creating 'suspension' for the special purpose vehicle
• Cash Available for Debt Service (CADS)
• Loan Life Cover, Project Life Cover, Debt Service Cover (LLCR and ADSCR)
• Surplus cash flows, lock-up, cash sweeps
• Waterfall/cascade, reserve accounts
• Contingency reserves
• Designing structures to match cash flows
• Dealing with default
• Mortgage debentures/fixed and floating charges
• Separating risk-taking and funding
• The implications for limited recourse financings 

DAY 3

CASE STUDY 5: Emerging Market Infrastructure Project 

CASE STUDY 6: Merchant Power Project 

Project Cash Flow Models
Project cash flow models are exceptionally detailed. There is need for a clear focus on their objectives and the planning/design process.

• Project dynamics, origins of cash flow volatility
• Limitations of predictive modelling
• The importance of risk-measurement or volatility models
• Modelling of cost structures
• Model layout
• Allocation of risks/cash flow volatilities
• Scenario testing and break-even analysis
• Summarising the outputs of the model
• Routines for assisting third party negotiations 

Demonstration Exercises
Illustration is provided of various aspects of a project finance model and the planning and design process lying behind the various worksheets.

• Pre-completion
• Depreciation
• Amortisation
• Cash sweeps
• Cash flow waterfall
• Currency schism
• Calculation of returns
• Sensitivity analysis and scenarios
• Break-even analysis 

Other Modelling Issues

• Best practice
• Circular references
• Macros 

Optional Evening Workshop – Free of Charge - Practical Modelling Masterclass
For participants who are actively involved in modelling and will benefit from practical and hands-on computerbased exercises, this session (from approx 4.30pm to 7.30pm) will involve one or more exercises, which are designed to develop skills. Participants will be invited to nominate which part of a model the exercises should focus upon - to address awkward issues that may have been encountered in the past. It may investigate further some of the exercises that are listed above under "Demonstration" exercises. Those wishing to participate in the masterclass should bring their own laptop/notebook.

DAY 4

CASE STUDY 7: Telecoms Project 

Technical Issues in Limited Recourse Financings
This section deals with a number of topics where project finance changes the conventional treatments

• The proper calculation of IRR
• Insurances – pre-completion and operating phase
• Assignment and cut-through agreements
• The options for dealing with political risk
• Environmental risks – the limitations of insurance
• Currency exposures – optional approaches to structuring
• Financings involving multilateral agencies - implications
• Direct agreements
• Step-in rights 

Bond Financing
An increasingly important financing option, but having very distinct disadvantages as well as advantages.

• The history of bond finance of limited recourse SPVs
• Cross-border bonds – prerequisites
• Rule 144A – implications for emerging market projects
• Rating agencies – approach to different sectors
• Piercing the sovereign ceiling
• The limited window for high yield bonds
• Why use bond financing – advantages and disadvantages 

CASE STUDY 8: Gas Project – Bond Funded 

CASE STUDY 9: High Yield Bond, Mining Project 

• Domestic bonds
• Credit enhancement – monoline insurance

CASE STUDY 10: Credit-Enhanced Infrastructure Project

DAY 5

CASE STUDY 11: Airport Project

CASE STUDY 12: Leisure and Property Project 

Sponsor Perspective
Sponsors need to have a disciplined approach to screen projects that are likely to deliver the benchmark IRR. There are number of potential pitfalls in the analytical approach.

• The investment analysis without project finance
• The difference in approach with a limited recourse structure
• Project IRR contrasted with equity IRR
• The drivers of equity IRR – and implications of negotiation of the financing term sheet
• Evaluation of projects in emerging markets 

Export Credit Agencies
An explanation of how ECAs and their products work, and the pluses and minuses of getting them involved in the structure.

• Buyer credits
• Political and commercial risk cover
• Concessional CIRR finance rates
• Lines of credit
• Advantages/disadvantages of ECA involvement 

CASE STUDY 13: Oil & Pipeline Project 

The Golden Rules of Project Finance - "REAL LIFE" CASE STUDIES – PUTTING THEORY INTO PRACTICE
The overall aim of the programme is to increase and optimise your practical project finance skills and in order to achieve this goal, the programme includes thirteen or more detailed and interactive case-studies covering the following sectors:

• PFI transport (rail)
• LNG
• Leisure – Resort
• PFI hospital
• Pipeline
• IPP Power
• Airport
• Oilfield
• Merchant power
• Toll-road
• Mining
• Telecoms

 

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