the project finance course - redcliffe training...the banking and corporate finance training...
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The Banking and Corporate Finance Training Specialist
The Project Finance Course
This course can be presented in-house for you on a date of your choosing
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Course Overview
Your course director has spent more than 40 years in the banking and financial sector, much of it in a senior managerial/Director role. He is a former Institute of Banking Lecturer,
having gained distinctions in the exams. He is a subject matter aspect on all aspects of retail, corporate and global banking, including risk management and regulatory compliance. He has lectured extensively to both leading global financial institutions and to
smaller bespoke specialists. He has delivered extensive programmes in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited
Master Trainer at the world’s biggest global bank.
Project Finance is an essential element of any bank’s product range and is an attractive proposition, done well. It usually involves large and creditworthy clients, seeking significant
sums to construct something that will take between 3-7 years (typically) to build and which will generate sufficient cash-flows on completion to service and/or repay the loan, pending
refinancing or sale. This course considers a range of project deals from £35m upwards to several £billions to
ensure it will appeal to delegates from all types of bank backgrounds, not just Global Banks.
The text-book definition of Project Finance reads: “The raising of finance on a limited recourse basis, for the purposes of developing a large
capital- intensive infrastructure project, where the borrower is a special purpose vehicle and repayment of the financing by the borrower will be dependent on the internally
generated cash-flows of the project”
What does this mean in practice and just how limited is “limited recourse”? As well as dealing with these questions, this course examines the role and availability of project finance in the current market place.
Using numerous case studies, the course will consider projections, cash-flows and balance
sheet analysis to an appropriate level. It will include the main principles such as a thorough review of the roles of the different parties in the transaction, an examination of the four different phases of the project, the risks in all their various guises, the methodology behind
the construction of the cash-flows and the techniques deployed in their evaluation.
We also examine the structure of the transaction, the legal and documentation aspects, and the essential due diligence procedures and most importantly the source of repayment. This will include a review of the various PPP schemes in use
The course also has specific case studies devoted to the more specialist areas of Oil & Gas
finance, Mining, LNG and Renewable Energy. About the Course Director
Your course director has spent more than 40 years in the banking industry, much of it in Global Banking and Trade at all levels of client, not just as an academic or consultant but
as a bank manager initially rising to main board director level. He is a former Institute of Banking Lecturer. He has lectured extensively to all the leading global banks including the world’s largest institutions. He has delivered extensive programmes to banks in all parts of
the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited external Master Trainer for the world’s biggest trade finance bank.
Course Overview
Background of the trainer
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Project Finance Overview Contrast with other forms of limited recourse financing The rationale for using project finance and trends
Recourse Due diligence required
Syndication overview Project Finance - the Parties
Who is involved Syndication or sole sources
Third party interests Government interests PPI schemes
Case study: A course length project based on a real life case and chosen for its appeal to delegates. At this, the “application stage” we consider the parties and
their impact on the project Project Finance - The Details
Definitions & basic principles Suitable Lending vehicles – why use an SPV?
Suitable projects Syndication
Participation Risk/reward Extra Curricular benefits
Strategic/policy implications Case study: Melchester United – a fictional applicant for finance to buy a football
club based on a real case.
The Objectives of Project Appraisal/Feasibility Key issues - budget, timing and sustainability issues Suitability
The importance of independent scrutiny What are they expected to achieve
What impact do they make on the project How much detail Skills needed to complete appraisals
The “gateway” process Case study: Back to the course long case study looking now at the appraisal and
feasibility aspects.
Project Costs Quality and accuracy of estimates
What is a cost plan; preparation and limitations Provisional sums, allowances & contingencies Dealing with exclusions
The goal of cost certainty Value engineering
Factors affecting likely outturn costs When to walk away Case study: Building a hotel above an airport car park. What are the risks?
Based on a real life case with a surprising outcome
Course Content
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Programme Is the programme realistic Development programmes – identifying critical events
Efficiency & minimising lapsed time Monitoring delivery and ensuring targets are met
Dealing with inefficiency & missed targets Consequences of timing changes – delay or acceleration Case study: A brief look at the programme for the course long case. Are there
aspects which should please and/or trouble us?
Project Risks What are the most common risks
Conducting risk workshops Risk assessment during development Risk measurement
Risk registers Dealing with risks not measured or disregarded by the project
Development risks – delays & cost overruns Risk protection
Risk transfer Case study: “Northern Water” – a fictional high risk project which only works if it is structured properly.
Project Funding
Cashflows before, during and after completion Equity or quasi equity investment
Debt versus equity Co-funding & contingent agreements Covering funding shortfalls
Appropriate debt structure and terms Managing exposure and maximising security
Dealing with problems When to cut losses and foreclose
Case study: A review of projections to highlight the areas of concern and greatest risk as well as the comfort zones.
Monitoring Projects General principles
Project managers versus project monitors The role of monitoring reports Operational challenges
The importance of cross party communication Resolving disagreements
Cost effectiveness Managing more than one monitor Insurance especially PI
Case study: Looking at a report on the course long project. What does it tell us in practice? What should we do?
Project Ownership Structures Considerations in selecting a structure
Project finance structures Special Purpose Vehicle (“SPV”)
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+44 (0)20 7387 4484
General and limited partnerships Joint Ventures (“JVs”) Case study: Looking at different structures to understand why each one is used
and what risks arise as a result.
Sources of Funding Types of equity and debt Methods of obtaining finance
Structure of capital markets International issues
Bond issues and securitisation Case study: Using the course project, what sources of funding should be used and why. What should we do if the client wants a different approach?
Project Finance Documentation
The documentation process Key “command & control” documents Borrower needs
Sponsor needs EPC needs
“Hot buttons”
Project Finance Risks Classification and identification of risks
Risk matrices The role of due diligence Risk allocation and mitigation
Case study: The course length project starts to go wrong as a result of unmitigated risks. What should we do? What can we do?
Credit Enhancement and Security What is available
Funder’s requirements Perfecting, valuing and controlling security
Going or gone concern measurement Enforcing security Third party security
Practical considerations Case study: The course length project is still in trouble. We are asked to review
the security and our options.
Project Finance - The Lender’s Perspective Key figures in the financial projections Ratio analysis and limitations
Financial, covenant and country risk ratios
Project Finance - The Sponsor’s Perspective Methods of evaluating investment decisions
Factors influencing the cashflows The cost of capital – choice of discount rate
Project Finance – What to do when it goes wrong How “wrong” is a worry and what is “normal”
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Monitoring systems Communication
Options & Responsibilities Gone and going concern analysis
Building out or foreclosing Debt servicing & Repayment
Case study: Our case study needs serious help. What are our options? .
Project Finance – Completion and Refinance What do we mean by completion Refinancing options
Do we want to stay involved How can we assist the client further.
Case study: Our case study is complete and is a success. What are the re-financing options and how can we assist
Oil & Gas Finance – Case Study Real case study to illustrate how these work
Mining Finance – Case Study
Real case study to illustrate how these work
LNG – Case Study Real case study to illustrate how these work
Renewable Energy – Case Study
Real case study to illustrate how these work
Course Conclusion Summary
Review Open forum