Course Introduction

This course teaches participants the core skills, techniques and conceptual framework required to create world-class financial models that are robust, accurate, well-structured, and user-friendly. The course focuses on industry best practices, model structure and design; and the construction of a model from scratch using Excel application.

Through an intuitive and highly interactive, step-by-step practical hands-on approach; participants will gain a solid conceptual understanding of the issues involved in financial modelling and grasp the mechanics of the model building process using real-life case studies.

 

Course outline

Overview of the basic principles of modelling in excel

Model structure or design methodology

Model development techniques

Model formatting tools

Modelling application: Building Forecast Financial Statements

Model inputs

Model calculations

Flexible timing structure using appropriate date functions and binary flags

Capital Expenditure breakdown with contingencies controls

Production calculations with multi-path optionality on time-series schedules

Revenue build-up with detailed pricing controls

Operational and maintenance expenses including fixed and variable items

Cash Flow Available for Debt Service calculation

Term debt structuring and annuity repayment through first principles

Debt Service Coverage Ratio repayment functionality

Linear and bullet repayment structures

Financial ratios and metrics

Key returns results such as IRR and NPV

Sensitivity and scenario analysis through powerful Excel techniques:

Model outputs: Dashboards, Income Statement, Balance Sheet & Cashflow Statement

Model review and audit

Key Modelling Issues

 

Project Finance Training Course

 Course Introduction:

The goal of this course is to equip participants with an overview of Project Finance by taking them through all stages of a Project Finance transaction, so that they can apply the techniques of Project Finance. It will introduce participants to industry concepts, transaction processes, risk analysis, and typical deal structures, and a framework for commercial transaction analysis.

In this course, you will acquire the skills to expertly navigate a project finance transaction and gain a strong understanding of the big picture.

With commercially focused examples, you will gain compelling insights into metrics, transactions timelines, scenario analysis as well as sponsor/investor benefits and challenges.

 

Key Learning Objectives

Acquire foundation knowledge of concepts and applications of project finance transactions to apply immediately in your project analysis

Achieve a commercial understanding of industry metrics, funding mechanics, risk analysis and legal structure

Understand transaction milestones and how they relate to due diligence

Appreciate how the mechanisms in the transaction documents operate to protect the creditors and evaluate the protection provided

Build a credit rationale to make and substantiate investment decisions

 

Course Outline

Introduction

Key characteristics of Project Finance and factors influencing the choice of Project Finance vs other debt financing options

Intensive overview of a transaction to illustrate key aspects of a Project Finance

Characteristics of strong sponsors

Ownership structure and relationship with key parties to the transaction

Segregating cash flows and de-linking from related parties.

 

Features of Project Finance

The Contractor and the Turnkey Construction Contract (TKCC)

Operations and Maintenance Contractor and the O&M Agreement

Purchasers and Sales Agreements

Suppliers and Raw Material Supply Agreements (RMSAs)

Project Finance as a Risk Management Technique

 

Assessing the Risks

Discussion of risks in selected transactions in different business sectors to illustrate some lessons of experience

Country and political risks: role of governments and related sovereign risk

Macro-economic risks and understanding their impact on project risks

Industry Risks

Social-environmental exposures

Contractors: attributes of strong contractors

Cost structure: contracts, budgets, and allocation of costs

Delay risk and contract terms: capacity to accommodate delays and transferring risk

Technology risk: factors which increase technological risk

Operator: uncovering risk related to the operator including performance, reputation, and financial position

Supply risk: quality and price of resources and products required for operation

Technology risk: obsolescence/economic life/remediation

Costs: make-up, timing, and potential volatility of operating costs

Revenue risk /Off-take: demand risk arising from multiple payers

Early termination risk: events which may lead to termination pre-maturity and lenders’ step-in rights

Counterparty risks: risks relating to key parties to a project

 

Transaction structuring

Evaluating the underlying operational and financing assumptions

Assessing the capital structure of the project entity and interest and currency exposures

Funding providers and types of funding and potential impact on credit risk

Debt profile: Amount, term, amortization schedule, currency and interest rate mechanisms

Determining the project’s capacity to generate stable cash flow to service the debt levels – Base case and appropriate stressed sensitivities

Assessing the project debt service capability using DSCR (Debt Service Cover Ratio), LLCR (Loan Life Cover Ratio), PLCR (Project Life Cover Ratio)

Counterparty risks: Creditworthiness and structural features to mitigate risk

 

Project Investment Criteria

Measures used by Investors: Payback period, Net Present Value (NPV), Internal Rate of Return (IRR)

Measures used by Lenders: Leverage, Debt service, Loan Life, Project Life Cover Ratios

Cost to the user: Value for Money and Affordability

 

Financing the Deal

Advisory and Arranging Activities for Project Finance Funding

Other Advisory Roles in Syndicated Loans

Fee Structure

Fund providers: International Financial Institutions and Regional Development Banks, Export Credit Agencies (ECAs)

Funding Options and features: Equity (Stand-by Equity and Equity Acceleration) , Mezzanine Financing and Subordinated Debt, Senior Debt, Working Capital Facility

 

Jurisdiction, Legal and Expert Reports

Issues to consider legal framework, licences, regulation, legislation etc

Project contracts

External technical reports: Clarity, transparency, and timeliness

 

Documentation

Evaluating the appropriateness of the system of contracts by which the project finance deal is being organized and the soundness of their structure and content

The Contract Structure

Before the Financing: The Due Diligence Report and the Term Sheet

Classification of Project Documents

The Credit Agreement

Security Documents: Security Interests and What They Do

Project Agreements

Refinancing Project Finance Deals

 

Case Study and Presentation

Application of all the aspects of Project Finance assessment as addressed during the workshop to a case study.