London School of Project Finance

Module 1: Advanced Project Finance Workshop (4 days)

Day 1 Themes: Structuring Projects and Creating a Security Package; Oil and Gas Projects

Project Finance Overview

• Current Challenges /Approaches
• Who are the Players? Identifying and Allocating Risks
• What Can Go Wrong?
• Examples from Natural Resources and the Energy Sector
• Financing Infrastructure

Various Projects and Approaches to Risk Identification Across Sectors

• Risks in Development,
• Construction, and Operating Risks
• Feedstock and Supply
• Market Risks
• Environmental Risks
• Financial Risks
• Political and Regulatory Risks

Sources of Finance: Financing Checklist

• Domestic and Foreign Banks
• Bond Markets
• Development Banks, ECAs and Other Official Creditors
• Leasing
• Islamic Finance
• Sources of Equity

Cashflow Forecasting

• Financial Modeling and Cash Flow Analysis
• View of Lenders: DSCR and PV Coverage
• Equity Considerations: IRR and NPV
• Approaches to Evaluating the Cost of Capital
• Project Returns vs. Equity Returns
• Forecasting Techniques and Limitations
• Probabilistic vs. Non-Probabilistic Model-Building

Day 2 Themes: Sources of Finance and Credit Enhancement; Power Projects

Legal Issues and Documentation

• Legal Environment and Regulatory Conditions
• Commercial Points and Legal Points in Various Project Structures:
• Key Contractual Agreements and Structuring Considerations
• Developing a Term Sheet
• Limiting Recourse
• Tax Gross Up Issues
• Market Disruption Provisions
• Reps and Warranties
• Conditions Precedent
• Covenants Including MAC Clauses
• Hedging Requirements

Sources of Finance

• Banks and the Current Club Loan Market
• Syndicated Loan Financing
• What Security do Banks Want?
• Market Flex Clauses
• Development Bank "A" and "B" Loans and Other Funding Sources
• Inter-creditor Issues

Credit Enhancement Alternatives

• Guarantees and Insurance vs. Funding
• Buyer and Supplier Credits
• Bank Incentives Inherent in ECA Programs
• Costs and Availability
• Securitization of ECA Guarantees
• Choosing a Special Purpose Vehicle

Liberalizing Power Markets

• Market Forces and Effect on Electrical Supply
• Fragmentation of Electricity Generation
• Generating, Transmission, Distribution
• Merchant Power Plants (MPPs)
• Rating Agencies' Analytical Model

Day 3 Themes: More Financing Sources and Structuring Considerations; Renewable Power Project Transactions

Renewable Energy Project Financing

• Growth of the Market: Sectors, Drivers of Growth
• Energy Usage and Investment Globally
• Global Incentive Programs
• Renewable Energy Sources
• Comparative Levelized Cost of Energy (LCOE)

Capital Markets Applications

• Private Placements and Eurobond Issuance for Projects
• Comparing Bond Issuance to Bank Loans
• Nature of Investors, Timing and Flexibility
• Project Size and Relative Cost
• Security Requirements
• Negative Arbitrage Issues
• The Due Diligence Process / Road Shows
• Rating Agency Considerations

Islamic Finance and Leasing

• Definitions, Principles, and Authoritative Sources
• Structures:Murabaha, IstisnaandIjara
• Examples of Petrochemical and Other Transactions
• Leasing Applications in Projects
• Evaluating Cost

Day 4 Themes: Credit Enhacment with Development Banks and Other Official Creditors; Transportation Projects; Risk Management and Derivatives

What is Public Private Partnership (PPP)?

• Public Private Partnerships (PPP) Principles
• Roles for the Public and Private Sector
• Different Structures and Degrees of Private Participation
• Contract Services: Operations and Maintenance, Management
• Leasing, Lease Develop Operate (LDO), Lease Purchase, Sale Leaseback
• Design Build: DB, DBM, DBO, DBFO
• BOT, BOO Concessions
• Transport Projects and Social Infrastructure

Development Banks and Agencies

• World Bank Group
• Regional Multilateral Development Banks (Asian Infrastructure Investment
• Bank, Asia Development Bank, Africa Development Bank, EBRD, EIB,
• Inter-American Development Bank, Islamic Development Bank,
• Others)
• Bilateral Agencies (FMO, DEG, OPIC, Proparco, etc.)

Transportation Projects and Other Infrastructure

• Long-term Concessions
• Roads, Railroads, Airports, Ports and Other
• Constructing a Specialized Risk Matrix

Module 2: Cashflow Modeling (1 Day)

Day 5 Themes: Project Finance Modeling

Modeling Workshop Overview: Objectives and Approaches

• Constructing a Model / Common Myths
• Variations by Project Type
• Overview of LNG Plant and Major Contracts

Structuring the Model and Data to Create a Cashflow Statement

• Developing the Assumptions Page
• Construction Costs and Timing
• Operating Cost, Plant Capacity Usage, Fixed and Variable Costs
• Reinvestment, Plant Expansion, Productivity Shifts

Financing Section

• Equity First or Pro Rata
• Manually Designed Equity Subscription
• Draw-down of Debt Linked to Specific Contracts, Expenditures or in a Hierarchy

Developing the Profit and Loss and Balance Sheet

• Factoring in Reserves
• Considering Currencies
• Tax Calculations
• Working Capital

Ratios and Sensitivity Analysis: Objectives and Limitations

• Measuring Debt Capacity and Investor Return
• Using Modeling Output for Initial Project Vetting
• Supporting on-going Negotiations