TABLE OF CONTENTS

 Advanced Project Financing:

Structuring Risk, 1st Ed.

 Introduction

            Project Finance's Origins

            Project Finance Defined

Project Finance Structuring

Off Balance Sheet

Non-recourse Completion Test/Option Conditions

Limited Recourse

Advantages

Capital Shortage

Risk Transfer

Deal Sequestration

Ratings management

Securitised Project Financings

Better returns

Consortium Control

            Tailoring

            Disadvantages

            Extra Cost and Time

References

Chapter One : Stages

 Structuring Stages

Construction

Commissioning/Completion

Technical Feasibility Study

Financial Feasibility

Market Feasibility

Board Paper

Approach to Banks

Progressive Authority

Credit Committee

Matrix

Sequential

Approach to Bond Underwriters

Take-Out (Re)Financing

Pricing the Sovereign Ceiling

Use in M&A

Equity/Mezzanine

Summary

References

 Chapter Two  Funding Sources

Local Currency Funding

Banks

Bilateral Agencies

US Exim

EDC

EGCD

Coface

JBIC

Hermes

SACE

SESCE

ABB

EFIC

MEBIC

Exim China

OPIC

CDC

Multilaterals

The World Bank

EBRD

ADB

EIB

MIGA

Capital Markets

Developers

Mezzanine

Merchant Financing

Islamic Lending

Governments/PPP

Leasing

Commodity

Equity

Summary

References

 Chapter 3 : Cashflows

 Benchmark Cashflow cases

Modelling aspects

Principal repayment methods

Repayment Profiles

            Tribasa cash Sweep

Interest Bases

            Spreads

            Cash-trap Styles

Reserve Styles

Debt Service Reserve

Maintenance Reserve

Capex reserve

Cashflow Controls

Flow of funds through lockbox

Flow of fund without lockbox

Operations summary

Operating Cashflows

Gross revenues

Opex

Financing Costs

Financing Reports

Capex

Modelling language

Cashflow Modelling Approaches

Typical Sensitivities

Liquidated damages

Model Periods

Input Sheet

Modelling Shortcomings

Common Shortcomings

Summary

References

 Chapter 4 : Financial Advisers

Advantages & Disadvantages

Need for an Adviser

Advisory Costs

Who are the Financial Advisers?

Investment/merchant banks

Commercial banks

Investment Banks

Boutique advisers

Country specialists

Financial analysts

Accounting and Insurance firms

Legal networks

Stockbrokers or Equity firms

One-country specialists

Equipment Suppliers or service providers

Summary

References

Chapter 5 : Credit Ratios

Sector cashflow profiles

Debt Service Cover ratio "DSCR"

Key ratio targets

Residual

Base case cashflow

Downside case #1

Downside case #2

Interest Cover ratio

Principal Cover Ratios

PV Ratios

Loan Life Ratio "LLR"

Project life Ratio "PLR"

Residual Life ration "RLR"

Debt:Equity Ratio

Payback

Payback Calculation bases

Discount Rate

Leveraged IRR

Choice of discount Rate

Multi-tranche Ratios

Accounting ratios

Telecoms ratios

Summary

References

 Chapter 6 : Risk Systems

Insurance

Key Risks facing the company

Risk mapping - insurance industry

Lenders rights in insurances

Statistical

Modellers

Checklist

Contractual/Jig Saw

Project Finance : 16 risk systems

References

 Chapter 7 : Sector Profiles

Sector features

Power Cashflows

Tollways

Tollway Cashflows

Railways

Railway Cashflows

Resources

Resources Cashflows

Telecoms

Telecoms Cashflows

Satellites

Satellite Cashflows

Prisons/Hospitals

Prisons/Hospitals Cashflows

Airports/Ports

Airports/Ports Cashflows

Water/Waste water

Water Cashflows

Stadiums/Theme Parks

Stadiums/Theme Parks Cashflows

Summary

 Chapter 8 : Structures

Risk

1. Contract

2. Trigger

3. Study

4. Avoided

5. Financed

Risk Division

Document matrix

Interest

            Risk trade-off documentation

Principal

Drawdown Styles

1.      Certification

2.      Benchmarks

3.      Anticipated-Cost-to-Complete

4.      Up-front-Banks

5.      Up-front-Bonds

SPV

1.      Unincorporated Joint Venture

2.      Partnership

3.      Trusts

Mezzanine

Subordinated Debt

Working Capital

Bridge Loans

Multi-Tranche

Commodity Funding

1.      Warrants

2.      Production payments

Contract Structures

            Supplier Credits

            Buyer Credits

            Leasing

1.      Leveraged Leasing

2.      Wrap Lease

3.      Captives

4.      Double-Dip

5.      Hire Purchase

6.      Lease Tranches

Trigger Structures

Deferral

1.      Inverse order of maturity

2.      Current Order of maturity

3.      Banked Deferral

Pre-Export Financing

Prepayment

Advanced payment

Clawback

Mandatory Prepayments

Equity Kickers

Financed Structures

Equity

1.      Dividend Reserve

2.      Subordinated Debt

3.      Convertible/IPO

Securitisation

1.      CLO

2.      Revenues

Joint Financing

Study Structure

Ratings

1.      Methodology

2.      Default

3.      Deal Pricing

4.      Covenants

5.      Term

6.      Pricing

Avoided

Off Balance Sheet

1.      Deconsolidation

2.      Diamond

3.      Defeasance

4.      Derivatives

5.      Puts/Calls/Indemnities

6.      Comfort Letters

Summary

References

 Chapter 9 : Due Diligence

            Systematic review

            Feasibility Process

Selection of Experts/Engineers

Customary reviews

1.      Legal review

2.      Taxation review

3.      Accounting review

4.      Insurance review

5.      Environmental review

Traffic Studies

Construction Cost Audit

Power Sector

Resources

Common Sense

References

Chapter 10 : Supply Risk

Contract Structures

Supply Agreements

Supply Undertakings

Tolling Contracts

Supply Assurance

Finance Structure

Financed

Trigger Structure

            Insurance

Study Structure

            Supply Studies

Traffic studies

Subscriber studies

Water Supply

Water treatment

Oil & Gas reservoir

Mining Reserves

Power Project

Fuel Supply

Processing Projects

Weighting

Structured

1.      Borrowing Base

Physical tail

Depletion Protection

Summary

References

 Chapter 11 : Market Risk

Market Quantity

Sales Contracts

Take-or-pay contracts

Capacity Contracts

Buy-back contracts

Throughput agreements

Minimum Quantity

Market preference contract

Requirement Contract

Tolling Agreements

Advanced Sales

Production payments

Unliquidated Basic Sum

Contract Monetisation

Market price

Contract Structures

            Sales contract

Base price

Additional contract options

Merchant Financing

Consumer Financing

Trigger Situations

Hedging

Forward-contracts

Options-based

Swap-driven

Cross-swaps

Natural Hedge

Contract for Differences

Make-up deficiency Agreements

Insurances

Study Techniques

Macroeconomics

Microeconomics

Charting

Cycle analysis

Summary

References

 Chapter 12 : Foreign Exchange Funding

Foreign Exchange Risk

What percentage to structure?

Contract Structures

            Forward contracts

Parallel Loans

Barter

Trigger structures

Currency Swap

FX Swaps

CPI Swaps

Avoided

Natural Hedge

Commodity Lending

CPI Lending

FX Tariff

Barter

Study

Summary

References

 Chapter 13 : Operating Risk Technical Component

Technology Risk

Contract Structures

Technology Management

Technology Warranty

Quality Assurance

Technology Guarantee

Fleet Assurances/Backup

Trigger Structures

Business interruption insurance

Technology Insurance

Financed Structures

            Performance Bond

Study Structures

            Independent Certification

Alternate Technology

Technology Curve

Summary

Chapter 14 : 

Chapter 15 : 

Chapter 16 Environmental Risk

Environmental risk

1.      Emissions

2.      Catastrophe

3.      Contextual

Contract Structures

Environmental management

Rehabilitation Management/Revenues

Environmental Warranty

Trigger Structures

Rehabilitation Release

Emergency Response

Environmental Insurances

Financed Structures

Rehabilitation Guarantee

Pollution Control Bonds

Rehabilitation Reserve

Study

EIS

Environmental plan

Avoided

1.      Regulatory Waiver

2.      Regulatory Purchase/Trade

3.      Physical Waiver

Summary

References

 Chapter 17 : Infrastructure Risk

Contract Structures

Contract

Government Commitments

Pooled Infrastructure

Studies

Transport Studies

Fob offtake

            Summary

            References