Project Finance Debt Restructuring (In-House)

Project Finance Introduction

• Project finance basics

• The mechanics - providing protection to lenders

• Causes of default

Project Finance Default Statistics

• Examine the statistics published annually

  • Moodys Investor Services

  • Standard & Poor’s

• The range of defaults

  • the losses (Loss Given Default) incurred once a project has gone into default

• The statistics from a geographical and the industry sector perspective

The Brief

• Brief of the project – project overview, sponsors, construction, offtake, operation, & maintenance and cashflows

• Participants conduct a review of the project to determine whether they would invest or lend to the project

• Identification of the potential issues and risks

VHP – Role Allocation

• Participants will be split into groups and allocated roles in the project These groups will change throughout the case study

  • Group One – Project Company

  • Group Two – Lenders

  • Group Three – Offtakers / Government

  • Group Four – EPC Contractors

• Identifying the drivers and motivations of each of the major stakeholder parties

Restructuring

• Why restructure rather than go through formal insolvency procedures?

• The scope of the restructuring

• The parties

  • The borrower

  • The sponsors/owners of the borrower

  • The lenders

  • EPC Contractors

  • Offtaker / Governments

• The restructuring process

  • trigger event

  • information gathering

  • creditor organisation

  • standstill agreement

  • economic evaluation and restructuring negotiations

  • implementation and continued project operation

• Options

  • A review of the range of options

• Motivations

  • motivational drivers of each of the parties

• Lenders’ limitations / fears

Project Progress Reports - VHP Information Sheets

• Groups will debate a series of project progress reports on the project that detail the wide-range of sequential events that happen

• Groups are changed as reports are examined from each perspective

• The case study culminates in a high-level of distress and the participants need to determine a solution