Course Overview
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.
This Course is CPD Certified
All delegates will EARN 18.9 CPD POINTS for attending this Course.
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
Who should attend?
- Investment Analysts
- Investment Bankers
- Finance Executives
- Finance Managers
- Financial Analysts
- Financial Modellers
- Treasury Department Staff
- CFOs & Accountants
- Portfolio Managers
- Project Risk Managers
- Project Finance Officers
- Business Analysts
- Financial Controllers
- 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
