Legal Aspects of Project Finance Course

This 3 day course has been designed to address a need that has been articulated for a training course with much greater ‘granularity’ of content and depth in considering the complex legal issues that are associated with limited recourse financings.

This need goes beyond the basic features, and burrows into both the commercial and the legal interfaces in the various areas of a successful project structure – the designing of the SPV, the negotiation and documentation of the concession or the offtake (as applicable), the pre-completion development phase, the operations, and the financing structures that are available.

The course looks carefully at the commercial issues – risk identification and risk management – as well as the way in which the documentation and the legal structures deal with these issues.  It also pays regard to the implications of different approaches on both Sponsor IRR and debt serviceability.

Why You Should Attend

  • Understanding the perspectives of Government, Offtaker, Sponsor, Lender, Developer.
  • Dealing with the complexity of cross-border contract enforcement.
  • Pinpointing  significant differences in structure across the various sectors – infrastructure, power, oil & gas, telecoms, property & leisure.
  • Identifying the requirements of Lenders for risk management across those different sectors.
  • Quantifying the effect on Sponsor IRR of various alternative risk management and financing structure approaches.
  • Best practice in structuring the rights and obligations in the various contracts – turnkey EPC, financing, concession.

Course Content – (Day One – Day Three)

INTRODUCTION

  • Project  finance contrasted with corporate lending
  • The central role of contract
  • Risk allocation
  • The part played by security
  • Company, partnership, trust, joint venture and other entities – pros and cons
  • Perspective of the structure types in various projects
  • Cost-plus projects distinguished from market risk projects
  • The law of the contract
  • Jurisdiction, sovereign immunity, enforceability

CONTRACTUAL  BREACH

  • The importance of contract administration
  • The problems with litigation
  • Alternative dispute resolution
  • Expert mediation
  • International arbitration
  • The 1958 Convention

CONCESSION – BASED  PROJECTS

  • Characteristics of BOT and PPP based projects
  • Pre-qualification
  • A review of the pre-completion risks
  • The tendering process
  • Non-conforming tenders
  • Warranties and indemnities
  • Consents and planning approvals
  • Design, construction and commissioning
  • Performance monitoring
  • Employment and pension issues
  • Insurances
  • Payments
  • Information and audit access
  • The financial model
  • Change of law
  • Delay events
  • Relief events
  • Force majeure
  • Termination with and without fault
  • Various approaches to determining compensation
  • Step-in rights of grantor
  • Step-in rights of financier
  • Assignments and change of control
  • Corrupt gifts and payments

PRE – COMPLETION  –  EPC TURNKEY CONSTRUCTION

  • Overview of the FIDIC silver book
  • Liquidated damages, caps, prohibition against punitive element
  • Incentives
  • Policing damages – performance bonds, retention clauses
  • The “fixed price” clause
  • The control structures for variation and change orders
  • Pre-conditions to staged payments
  • Certification procedures – progress and cost-to-complete
  • Force majeure
  • Rights of rescission
  • Other termination rights and consequences
  • Completion guarantees
  • Two-phase financing
  • Contractors contingent redeemable equity
  • Latent defects and warranties
  • Insurances
  • Force majeure
  • Contract engineer
  • Blueprint release clause
  • Romalpas
  • Technology and logistics

OFFTAKE

  • Market-driven revenue structures
  • Volume and price
  • Take-or-pay and other cashflow-smoothing structures
  • Exclusions and force majeure
  • Dealing with vulnerabilities to renegotiation
  • Mechanisms for circumventing credit weakness in offtaker
  • Hidden recourse in operational contracts

FINANCING – COMMERCIAL PERSPECTIVE

  • The Agency Group – division of roles
  • The process of loan syndication
  • Why financial covenants are different in project finance to conventional lending
  • LLCR and ADSCR
  • The lockup covenants and payment blockages
  • Cashflow waterfall
  • Cash sweeps
  • Free Cash Flow – why is it fundamental to analysis
  • Cash Available for Debt Service (CADS)
  • The audited model
  • Liquidity – creating ‘suspension’ for the special purpose vehicle
  • Cashflow waterfall /cascade, project and control accounts
  • Designing structures to match cash flows
  • Dealing with default
  • Sponsor lock-ins
  • Mortgage debentures/fixed and floating charges
  • Separating risk-taking and funding
  • Basle III and Solvency II – implications for future project financings
  • Key issues for Sponsors:
    • Conditions precedent to distributions to Sponsors
    • The potential to ‘hide’ recourse, how and why
    • The trigger for recourse
    • The quantum of recourse
    • 3-dimensional leverage, incl. maturity, grace, sculpting
    • Voting deadlocks, majority vs unanimity, snooze ‘n lose
    • Removing individual financier participants, ‘yank the bank’, super majorities
    • Novation, assignment and risk participations
  • Other key issues:
    • Reps & warranties, repeating reps
    • The range of project undertakings
    • Negative pledge
    • Default interest
    • Increased costs carve-outs
    • Sponsor lock-ins, change of control
    • Sponsor insolvency
    • Appropriations law, partial payments
    • Illegality and severance
    • The effects of Basle 3 and Solvency 2
  • Lender rights upon default
  • Reschedulings, restructurings

NOTE: The trainer is available for private sessions (included in the cost of course registration) at the end of each day’s course to discuss the application of the course content to specific projects on which the participants are working on. Availability and priority is based on the order of registration.

  • Banks and Financial Institutions In-House Lawyers
  • Investments Officers
  • Legal Advisors
  • Company Secretaries
  • Legal Counsels
  • Economists
  • PPP Officials
  • Project Finance Managers
  • Structured Finance Managers
  • In-House Lawyers
  • Financial Officers of project sponsors
  • Project Lenders and Sponsors
  • Insurance Companies
  • Bank officers responsible for evaluating projects
  • Bank officers responsible for structuring projects
  • Project Finance Lawyers in private practice

Richard-Capps

Richard Capps

Richard has a unique blend of experience in Law, Corporate Banking, Investment Banking, Corporate Financial Management, General Management and Workout.  He has gained a worldwide reputation for the quality and depth of his project finance training courses which have been developed and presented over 20 years.

  • He trained as a lawyer at Cambridge and the Middle Temple and was called to the English bar.
  • 5 years with an American bank, the world’s largest financier of oil & gas projects, as a corporate relationship manager in New York and London.
  • 6 years: investment banking in Hong Kong and London, primarily involved in mergers and acquisitions and corporate restructurings.
  • 6 years: CFO of a public group with a joint head office in the United States and Australia.  In this role he was engaged in some 34 acquisitions, over 20 equity raisings and a large number of complex financings, many of them structured on a limited recourse basis.
  • 18 months: responsible for the workout of a company in severe financial difficulties, being appointed as General Manager by KPMG.
  • For the past 20 years Richard has acted as an independent consultant and financial trainer.
  • On the consulting side he has been primarily involved in project vetting; the financial modelling and structuring of power generation, LNG, mining, and petrochemical projects.
  • On the training side he conducts training courses in:
    • Project finance
    • Loan documentation
    • Financial modelling
    • Corporate finance & corporate valuation
    • Mergers &  acquisitions

Note:  His full professional Biography is available on request.

Venue:

Holiday Inn Hotel, Sandton – Johannesburg

Dates:

27th – 29th September 2017

Course Prices and Discounts can be viewed after registration.

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