Contents:

Preface Author biography List of case studies List of exhibits Introduction Project finance's origins Project finance defined Project finance structuring Advantages Disadvantages Summary Chapter 1: Structuring stages Technical feasibility stage Financial feasibility stage Market feasibility stage Use in mergers and acquisitions Project concept Summary Chapter 2: Funding sources Local currency funding Capital markets Developers Mezzanine Merchant financing Islamic lending Governments–public-private partnerships Leasing Commodity-based lending Equity Summary Chapter 3: Cashflows Modelling aspects Cashflow controls Modelling cashflows Summary Chapter 4: Financial advisers Advantages and disadvantages Need for an adviser Advisory costs Who are the financial advisers? Summary Chapter 5: Credit ratios Debt service cover ratio Residual Interest cover ratio Principal cover ratio Present value ratios Loan life ratio (LLR) Project life ratio (PLR) Residual life ratio (RLR) Debt:Equity ratio (D:E) Payback Discount rate Leveraged IRR Choice of discount rate Multi-tranche ratios Accounting ratios Summary Chapter 6: Risk systems Insurance Statistical Risk modellers Checklist Contractual/Jigsaw Project finance Chapter 7: Sector profiles Sector features Analysis by sector Summary Chapter 8: Structures Risk Risk division Document matrix Interest Principal Drawdown styles SPV Mezzanine Subordinated debt Working capital Bridge loans Multi-tranche Commodity funding Contract structures Trigger structures Financed structures Study structure Avoided Summary Chapter 9: Due diligence Systematic review The feasibility process Selection of experts/engineers Customary reviews Telecoms subscriber studies Common sense Chapter 10: Supply risk Contract structures Trigger structures Financed structures Study structures Structures Summary Chapter 11: Market risk Market-price Contract structures Trigger situations Study techniques Summary Chapter 12: Foreign exchange risk What percentage to structure? Contract structures Parallel loans Barter Trigger structures Avoided Study Summary Chapter 13: Operating risk – technical component Contract structures Trigger structures Financed structure Study structures Summary Chapter 14: Operating risk – cost component Contract structures Trigger structures Financed structures Study structure Avoided Summary Chapter 15: Operating risk – management component Contract structures Trigger structures Study Summary Chapter 16: Environmental risk Contract structures Trigger structures Financed structures Study Avoided Summary Chapter 17: Infrastructure risk Contract structures Studies Summary Chapter 18: Force majeure risk Acts of nature Acts of man(kind) Acts of government Impersonal acts Trigger structures Studies Summary Chapter 19: Completion risk Completion test Contract structures Trigger structures Financed structures Study approach Sector completion protocols Summary Chapter 20: Engineering risk Design/calculations Study Chapter 21: Political risk Definitions Government supports Treaty protection Contract structures Trigger structures Financed structures Study sources Avoided Chapter 22: Participant risk Sponsor pre-completion SPV Trigger structures Study route Avoided Summary Chapter 23: Interest rate risk Contract structures Trigger structures Summary Chapter 24: Syndication risk Roles Choice of banks and placements parties Pricing Disclosure Contract structures Study structures Chapter 25: Legal risk Legal regime Concept of law Enforcement The courts Solicitors/lawyers Contracted structures Trigger structures Study structures Avoided Summary Appendix 1: Differing definitions M&A Securitisation Lawyers Project financiers Appendix 2: Typical owner controlled insurance programme (OCIP) Section 1 Owner's project company insurance coverages – construction phase Section 2 Contractor's insurance requirements – construction phase Section 3 Owner's project company insurance coverages – operational phase Glossary Index

Summary:

Project finance is an attractive financing alternative enabling project sponsors to shed risks to the banks or capital debt markets. To the owner or parent entity, the non-recourse aspect is prized since it allows that company or group to go on to develop other projects – to become a serial developer. A knowledge of the risks and the structures of project finance to handle risk are paramount in achieving the best deal for both sides. This book provides a risk system which can be applied to any project in any industry sector, indeed the financing of any venture. It also outlines each structuring solution that would be acceptable to the project financiers. This book examines the structures and risk mitigants that can be considered to address the sixteen classes of risks in project-finance business. The text is supported by extensive case examples, exhibits, glossary, and index.