Full Description
This book is a guide to project financing, primarily used to fund infrastructure projects. While it focuses on electricity projects, its insights can be applied across various sectors. It employs a P&L statement as a framework for approaching deals, with CFADS at its core. It introduces fundamental building blocks to ensure CFADS remains predictable, mechanisms to safeguard its predictability, warning signals for material deviations, and a system of incentives and penalties to manage potential disruptions—all within the structure of a P&L statement.
In summary, this is a practitioners' guide in every sense. It sets minimum advisory standards expected by lenders, defines risk-informed contractual clauses that enable commercially bankable agreements, and provides calculations and assumptions necessary for determining debt size—irrespective of borrower structure or lending arrangements.
Contents
What is project financing? - A functional definition, highlighting project & lender configurations.- Profit and loss statement - Essence to distil CFADS, size debt and equity to fund a project.- Making CFADS (& DS) predictable - focusing on each line item of P&L statement.- How to protect CFADS (& DS) predictability - Focus on each line of P&L statement.- Setting up alarms and policing - Deviation of CFADS and DS and potential causes thereof.- Setting timings - periods starts and ends, business days notices and days to deliver.- Loan Market Association (LMA) precedent - Don't reinvent the wheel but pick 'n chose.- Security package - In case it all goes pear shaped.- Ancillary facilities - Other often necessary or advisable finance needs in one package.- CPs - Confirming facts before committing to lend.- Portfolio management - Policing compliance with credit/facilities agreement.- Respect established processes & negotiators' limitations - No mandate to re-engineer processes.- Basics of electricity and technologies therein.- Vertically integrated electricity monopolies - One end of regulatory spectrum.- Liberalised electricity markets - The other end of regulatory spectrum.- Investment support regimes - They differ by country and over time! Know what to lookout for?- Electricity market advisors - Price forecasts and insights beyond price forecasts.- Datacentres - Their valuation reports and resilience thereof as off-takers.- Due diligence: Understanding its general intricacies.- Legal due diligence - The details that matter and why?- Technical due diligence - The details that matter and why?- Insurance due diligence - What details matter and why?- Tax due diligence - What to lookout for and why?- Model audit - What a model auditor looks for and confirms to lenders.- Lender's scepticism and curiosity - Closing due diligence gaps and operational reporting cracks.- Single/multiple project vs numerous projects - Materiality informs DD and mitigation needs.- Online, realtime and collaborative due diligence - Live Diligence™ experience.- The project financing process - From courting, conception, cradle to grave.- Typical meetings and calls - Timetable and workflow on the March to financial close.- Leverage finance vs project finance -Chalk and Cheese.- Epilogue: The need for further edition of this book.- My project finance teachers - A roll call.
