THE MECHANICS OF

PROJECTFINANCE

POSTGRADUATE CERTIFICATEDELIVERED BY DISTANCE LEARNING OVER 16 WEEKS

Contact:www.iff-training.comTel: +44(0)20 7017 7190Email: cs@iff-training.com

Learning partner of

WHAT YOU WILL LEARN On completion of this distance learning course you will have improved both your technical and theoretical knowledge of project financing. Steve Mills will provide you with a step-by-step ‘toolkit’ and checklist to enable you to tackle every new project. After this course, you will be completely comfortable with your ability to analyse and be part of the deal team, able to assess the bankability of projects from a very wide range of sectors.

The course is written from the lender’s perspective, taking into account the investor’s viewpoint. This is a benefit as both the investor and the banker need to understand how the other thinks to get the most out of them.

The six core modules cover the basics of project finance, risk analysis and allocation/mitigation, debt sizing and structuring and documentation. Students then elect to pursue a specialist path – Power /Oil and Gas or Infrastructure/PPPs – and follow a two-module programme providing a ‘deeper dive’ into the specifics of project finance in these sectors.

COURSE AT A GLANCECORE UNITS:1. An Introduction to Project Finance 2. Qualitative Risk Identification Analysis & Mitigation (part A) 3. Qualitative Risk Identification Analysis & Mitigation (part B) 4. Quantitative Analysis, Debt Sizing & Structuring 5. Documenting the Deal 6. Project Finance Time-Line & Project Finance Security

CHOOSE BETWEEN TWO ELECTIVE PATHS ELECTIVE UNITS –

PATH A: 1. Infrastructure Project Finance 2. PPP/PFI Project Finance ELECTIVE UNITS –

PATH B: 1. Oil, Gas & Mining Project Finance 2. Conventional & Renewable Power Project Finance

COURSE LEADERSTEVE MILLS

Steve Mills is a career project financier who draws on 35 years of lending and advisory experience and 10 years of project finance teaching. Until 2007 he was the Head of the Oil and Gas Project Finance team at RBS, London, having worked also for HSBC and Sumitomo Bank, as well as cofounding a project finance

boutique firm. Since 2008 Steve has concentrated on training in the project finance sector and developed a number of highly-regarded public training courses for IFF.

Steve has also developed and delivered tailored in-house workshops across the globe for a wide range of banks, project sponsors and other companies active in limited-recourse finance. Steve’s courses have a strong emphasis on the underlying mechanics of project finance. He aims to distil 35 years of real deal experience into clear, easily understood units with a strong emphasis on the toolkit and its practical application. Delegates regularly praise the clarity and thoroughness of his presentations and, in particular, the value of his mindmaps and checklists.

HOW YOU WILL LEARN• A new module is released every two weeks• You can read the units online, save them to your computer

or print them out • You set the pace for yourself • No need to travel or take time off work – cost effective• Apply the knowledge, skills and expertise to your work

straight away

POSTGRADUATE CERTIFICATETo make your studies more relevant and valuable, the course is validated by the Business School at Middlesex University at a Postgraduate Certificate level. For those wishing to receive a Postgraduate Certificate from Middlesex University, an additional marked assignment of 5000 words will need to be submitted, based on a continuing case study that runs throughout the duration of the course.

PRICE Standard Price – £2299With Postgraduate Certificate- £2659

* VAT may be payable depending on your location – see online booking page for details

HOW TO APPLYTel: +44 (0)20 7017 7190 Email: cs@iff-training.com

CUSTOMISED TRAININGIFF’s bespoke digital training solutions will help you address your specific key business challenges. The programme is designed for you, with content focusing on the issues you and your teams are facing. The fully branded digital course will be hosted by us, and unlike other online courses, your employees will receive a specialist qualification at the end of the programme from a London University.

• Tailored content - 100% targeted to cover your business needs

• No travel or time out of the office – 100% Distance Learning

• Value for money – train teams of staff at the same time

• Risk free – we’ve been doing this for 30 years

We will meet you anywhere in the world. If you would like one of our consultants to talk about your needs in more detail or if you would like more information on our customised training solutions, please contact us on +44 (0)20 7017 7190 or email: cs@iff-training.com

COURSE INFORMATIONDELIVERED BY DISTANCE LEARNING OVER 16 WEEKS

APPLY ONLINE HERE

COURSE SYLLABUSUNIT 1 AN INTRODUCTION TO PROJECT FINANCEUNIT LEARNING AIMS AND OBJECTIVES. Explain the meaning of the term ‘project

finance’ and compare and contrast it with other forms of debt capital – especially corporate borrowing.

. Set out the reasons why companies choose (or do not choose) to use project finance and explain the contractual structures typically employed.

. Contrast the risk/reward relationship with the project enjoyed by the sponsor with that of the banker and how this affects the lender’s attitude to acceptance of risk.

UNIT CONTENTWhat is ‘Project Finance’ – How Does it Differ From Other Forms of Lending?

Who Uses Project Finance & Why?• ‘Off-Balance-Sheet’ lending• Project finance ‘Carve-Outs’• Joint ventures/unequal partnerships• Risk sharing• Capital rationing/return maximisation• ‘No Choice’

Key Characteristics of Project Finance – Corporate Structures & Contractual Relationships• Usually (not always) limited-liability ‘SPV’• Multiple contractual relationships: – construction contractor(s) – suppliers – offtakers – operators – insurance providers – public sector – government bodies and

agencies

Disadvantages for Borrowers/Sponsors• Increased complexity (risk identification/

mitigation/allocation)• Need for third-party due diligence reports• Longer timelines• Higher debt costs – interest margins and

fees• Supervision by and reporting to lender

group• Tighter debt covenants and undertakings

Risk/Reward Relationships of the Players – Lenders & Borrowers/Sponsors• Borrower/sponsor seeks to optimise return

through NPV/IRR/WACC analysis and wide sensitivity analysis on both upside and downside

• Lender is not exposed to upside – in business of analysing and managing/ mitigating/transferring risk

UNIT 2QUALITATIVE RISK IDENTIFICATION, ANALYSIS & MITIGATION (A)UNIT LEARNING AIMS AND OBJECTIVES. Explain the key qualitative risk factors

analysed by lenders when evaluating a project financing – in this unit particularly sponsor risk, country/political risk, completion period issues, and operation and maintenance arrangements.

. Explore how these risk factors are perceived by bankers, mitigated and allocated to other parties within or outside the project structure (where necessary).

UNIT CONTENTSponsor Risk – A Potential ‘On-Off’ Switch• Competence and track-record• Management skillsets• Equity injection – capacity and timing

Country/Political Risk – Banks are Better at Accepting Commercial Rather than Political Risk• What are the risks? – expropriation, confiscation and

nationalisation risk – other political perils – war, civil war – strike, riot and civil commotion – depreciation and non-convertibility• Mitigating country/political risk – political risk insurance – export credit agencies – multilateral agencies

Risks of the Project Itself (Part One)• Construction/completion risk – risk areas ~ time delay ~ cost overrun ~ technology ~ risk mitigants/transfers ~ transfer to the contractor – ‘fixed-

price turnkey’ contracts ~ transfer to the sponsor – pre-

completion guarantees and other support mechanisms

~ support from the lender – cost-overrun facilities

• Operation and maintenance risk – bank preference for robust long-term

arrangements – alternative types of structure – key ‘bankability’ features of O&M

contracts

UNIT 3QUALITATIVE RISK IDENTIFICATION, ANALYSIS & MITIGATION (B)UNIT LEARNING AIMS AND OBJECTIVES. Explain the key qualitative risk factors

analysed by lenders when evaluating a project financing – in this unit particularly supply risk, reserve risk, sales/offtake arrangements, approvals/permits issues, environmental factors and regulatory considerations.

. Explore how these risk factors are perceived, mitigated and allocated to other parties within or outside the project structure (where necessary).

UNIT CONTENTRisks of the Project Itself (Part Two)• Supply risks – split into volume and price – lender likely to be anxious about

uncovered volume risk – preference for ‘send-or-pay’ type of

structure – price risk analysed through modelling• Reserve risk – special type of supply risk – minerals projects have finite store of

value – also real sub-surface risks and

uncertainties – probabilistic vs. deterministic reserve

classification/valuation – applying banking value to reserves• Sales/offtake risk – split into volume and price – lender again likely to be concerned about

uncovered volume risk – offtake risk mitigation: ~ ‘take-or-pay’ contracts ~ tolling contracts ~ marketing agreements• Approvals and permits – usually transferred to sponsor – transfer effected through conditions

precedent• Environmental considerations – of immense and growing importance to

lenders – impact of environmentally and socially-

sensitive projects on lenders – advent of equator principles: ~ genesis and development ~ structure and function ~ impact on:

project analysis and ratingCredit approval processDocumentation – representations and warranties, undertakings and events of default

• Regulatory risk – role of the regulator – ensuring security

of supply and avoiding abuse of monopoly

– impact of the regulator/regulatory regime on:

~ project revenue/cashflow ~ structure/security

COURSE SYLLABUSUNIT 4QUANTITATIVE RISK ANALYSIS & DEBT SIZING/STRUCTURING

UNIT LEARNING AIMS AND OBJECTIVES. Examine how an economic model of

the project’s projected cash flow is employed to structure the drawing and repayment of debt.

. Explain the use of ‘Cover Ratios’ to size debt, structure the repayment of the financing, test the debt-servicing capacity of the project in downside scenarios and provide ‘command and control’ mechanisms during the life of the financing.

. Analyse the impact of the debt structure on the IRR of the sponsor and how the lender’s need for debt-servicing security is balanced with the objectives of the sponsor.

UNIT CONTENTThe Borrower/Sponsor Objectives:• Maximise debt• Minimise/delay equity injections• Maximise/accelerate distributions• Avoid ‘cash-traps’

Use of Different Techniques by Borrower to Assess Project Attractiveness – Cashback, Npv, Irr

The Banker’s Objectives – Timely Debt-Service with an Adequate ‘Cushion’

Debt Sizing & Sculpting• The cash flow waterfall in more detail • The lender’s model – its structure and

function – structure of a typical debt unit – interaction with other parts of the model – primacy of the cash flow• CFADS – the starting point for quantitative

analysis and debt sculpting• Lender ratios for debt calibration and

stress testing – debt to equity ratio and drawdown

control – ADSCR – definition and use in the

sculpting of mortgage-style repayment • The NPV-based ratios (LLCR/PLCR) and

sculpting to maintain loan-to-value • Control accounts and other ‘Cash Traps’ – debt-service reserve account – maintenance reserve account – cash sweeps• Base case design and sensitivity running – control of input parameters – technical

and economic – calibrating debt and structuring the

repayment methodology/profile – ‘testing for weakness’ – bank sensitivity analysis – dealing with the toughest issues –

accept, mitigate or transfer?• Getting to the optimum debt level –

balancing equity against bank funds

UNIT 5 DOCUMENTING THE DEAL

UNIT LEARNING AIMS AND OBJECTIVES. Explain the process of documenting a

project financing transaction and the components of the major documents – with particular reference to the loan agreement itself.

. Analyse the purpose and structure of the key parts of a project loan agreement – especially the control mechanisms incorporated to protect lenders in periods of weak cash flow or at the point of default.

. Develop an understanding of the way in which material issues are often resolved.

UNIT CONTENTThe Documentation Process• The lender/borrower/counsel interface • Different approaches to the term sheet • Drafting for completeness with economy

A Recap on Syndicated Debt Terminology with Special Reference to Project Finance:• Obligors – borrower and guarantor• Use of and access to the funds – purpose,

availability and conditions precedent• Loan economics – interest and fees• Repayment and /or prepayment

The Key ‘Command & Control’ Mechanisms in Project Finance Agreements• Control accounts and the cash flow

‘Waterfall’ – the cash flow waterfall – purpose, typical

priority ranking and variations – types of control account: ~ disbursement account ~ revenue/proceeds account ~ compensation account ~ debt service reserve account ~ maintenance reserve accounts• Availability and the debt: equity balance• Conditions precedent• Reps and warranties• Covenants – in particular: – debt and security limitations – reporting requirements – restrictions on amending project

documents – maintenance of ratios – distribution lock-ups• Events of Default – in particular: – default cover ratios – default under project documents – abandonment/cessation of production

Borrower/Sponsor Needs and ‘Hot-Buttons’• Access to the loan facility• Limits on operating flexibility and control• Cash-traps and ‘IRR-Killers’• Offences against the limited-recourse

concept• Pricing – margins and fees

UNIT 6 THE PROJECT FINANCE TIME-LINE & PROJECT FINANCE SECURITY-TAKING

UNIT LEARNING AIMS AND OBJECTIVES. Explain in detail the process of

negotiating and documenting a limited-recourse financing and the way in which the steps (and their duration) can be impacted by changes to the economy.

. Provide a clear appreciation of the different instruments typically used by lenders to acquire a first-ranking security interest in respect of the project vehicle company, fixed and current assets, project contracts and other rights.

UNIT CONTENTSteps in the Project Financing Process• Pre-feasibility analysis• Financial feasibility analysis – using

advisers• Approaching lenders – underwriting/best

efforts; financing competitions• The Banks’ credit process• Due diligence consultants• The documentation process• Reaching financial close

Lender Security-Taking Objectives• Maintaining priority/defeating the ‘pari

passu’ principle• Maintaining value• Limiting dealings• Negotiating strength• Enforcement/disposal

Relative Value of Different Security Types

Security in Challenging Locations

Key Security Instruments:• Guarantees and indemnities• Bank guarantees and performance bonds• Pledges• Mortgages and charges• Assignments• Security over shares• Credit balances • Direct agreements

ELECTIVE UNIT 1INFRASTRUCTURE PROJECT FINANCE

UNIT LEARNING AIMS AND OBJECTIVES. Set out in detail the qualitative risk analysis and debt structuring

features peculiar to infrastructure project finance.. Provide a clear understanding of the variations in financing

structure and practice seen in key sub-sectors such as road, rail, port and airports.

. Test understanding through a detailed financing case study requiring risk analysis and the exercise of judgement on whether a project is bankable and (if so) optimally structured.

UNIT CONTENTSector Background• History and drivers of infrastructure project finance• Contractual and legal framework• Key project documents – the concession and other government

agreements

The Banker’s Risk Analysis/Key Structuring & Pricing Drivers • Local legal issues – procurement regime – concession law – insolvency law – experience and capacity – political risk• Concession risk – awarding authority – tenor – revenue basis – termination – asset ownership – security – penalty regime• Construction issues in infrastructure transactions• Operation and maintenance• Typical risk allocations

Modelling & Structuring Methodology• Base methodology• Sector variants – roads – rail/light rail – ports – airports

The Infrastructure Project Finance ‘Identikit’• Key lender concerns• Typical maturity profile• Likely gearing/leverage levels• Debt sculpting methodology• Pricing• Security structures

Case Study

ELECTIVE UNIT 2PPP/PFI PROJECT FINANCE

UNIT LEARNING AIMS AND OBJECTIVES. Set out in detail the qualitative risk analysis and debt structuring

features peculiar to PPP/PFI project finance, the drivers for the establishment of the sector and the key documents which underlie PPP/PFI projects – particularly the concession.

. Test understanding through a detailed financing case study requiring risk analysis and the exercise of judgement on whether a project is bankable and (if so) optimally structured.

UNIT CONTENTSector Background• Drivers for PPP/PFI project finance/origins of the sector• Features of PPPs/contractual and legal framework• PPP/PFI agreements• The PPP process/public sector involvement• Investor drivers – contractors and financial investors• Impact of ‘credit crunch’

The Banker’s Risk Analysis/Key Structuring & Pricing Drivers• Local legal issues• Concession risk• Demand risk – who takes it?• Construction issues in PPP transactions• Operation and maintenance • Typical risk allocations

Modelling & Structuring Methodology• Base methodology• Sector variants – roads – hospitals – schools – prisons – waste

The PPP Project Finance ‘Identikit’• Key lender concerns• Typical maturity profile• Likely gearing/leverage levels• Debt sculpting methodology• Pricing• Security structures

Case Study

EACH DELEGATE TO COMPLETE EITHER ELECTIVE PATH A OR ELECTIVE PATH BELECTIVE PATH A – TWO UNITS TO COMPLETE

ELECTIVE UNIT 1OIL & GAS/MINING PROJECT FINANCE

UNIT LEARNING AIMS AND OBJECTIVES. Explain the particular challenges faced by lenders providing

limited-recourse finance to projects in the extractive industries, especially where the bank is to accept oil/gas/mineral reserve risk.

. Provide a clear understanding of the variations in financing structure and practice seen in key sub-sectors such as upstream reserve-based lending, refinery finance, pipelines and storage, LNG and petrochemicals.

. Test understanding through a detailed financing case study requiring risk analysis and the exercise of judgement on whether a project is bankable and (if so) optimally structured

UNIT CONTENTSector BackgroundThe hydrocarbon value chain – upstream to downstream• Petroleum geology and reserves – the ‘Bare Bones’• Mining reserves – the ‘Bare Bones’• Exploration and development licences, concessions and other

agreements

The Banker’s Risk Analysis/Key Structuring & Pricing Drivers• Upstream oil and gas lending: – single-field transactions – portfolio lending – junior financing products• Refinery finance• Pipeline and storage finance• LNG financing: – liquefaction – regasification – tanker Finance• Petrochemical financing• Financing the extraction and processing of other minerals

Modelling & Structuring Methodology• Upstream oil debt structuring – single and multiple fields• Midstream/downstream debt structuring: – refineries – LNG – petrochemicals• Open cast and underground mining

The Oil & Gas and Mining Project Finance ‘Identikit’• Key lender concerns• Typical maturity profile• Likely gearing/leverage levels• Debt sculpting methodology• Pricing• Security structures

Case Study

ELECTIVE UNIT 2CONVENTIONAL & RENEWABLE POWER PROJECT FINANCE

UNIT LEARNING AIMS AND OBJECTIVES. Set out in detail the qualitative risk analysis and debt structuring

features peculiar to power project finance, the impact of the power sales arrangements on debt capacity and structure and the differences between conventional (gas and coal-fired) projects and those involving renewable energy sources.

. Test understanding through a detailed financing case study requiring risk analysis and the exercise of judgement on whether a project is bankable and (if so) optimally structured.

UNIT CONTENTSector Background• How power markets work• Financing power projects in emerging markets• Developed/regulated markets• ‘Base-Load’, ‘Mid-Merit’ or ‘Peaking’?• CHP/cogeneration projects• Renewable energy and energy from waste

The Banker’s Risk Analysis/Structuring & Pricing Drivers• Offtake Regime – power purchase agreements – tolling projects – merchant power – green certificates – feed-in tariffs• Construction issues in power transactions• Operation and maintenance regime• Typical risk allocations

Modelling & Structuring Methodology• Power purchase agreement transactions• Tolling projects• Merchant power• Renewable power projects• Cogeneration projects

The Power Project Finance ‘Identikit’• Key lender concerns• Typical maturity profile• Likely gearing/leverage levels• Debt sculpting methodology• Pricing• Security structures

Case Study

ELECTIVE PATH B – TWO UNITS TO COMPLETE

OPTION OF A POSTGRADUATE CERTIFICATE WITH MIDDLESEX UNIVERSITYYou have the unique opportunity to choose a validatedoption for this course and receive a postgraduatecertificate on completion. This is a MiddlesexUniversity qualification, jointly developed by MiddlesexUniversity and IFF, and quality assured by MiddlesexUniversity. However, if university validation isn’timportant to you there is still the opportunity to takethe standard non-validated course.

WHAT DOES THE CERTIFICATE ENTAIL?In addition to studying all the units and passing the shortself assessment tests after each unit, you will need tosubmit a 5000 word assignment at the end of the coursewhich will be assessed. The assignment will be acumulative project that you will work through and buildupon during each stage of the course.

If you wish to book on the certification course there willbe an assessment fee of £360.

ENTRY REQUIREMENTSParticipants wishing to undertake the Postgraduate Certificate are required to have a degree or equivalent qualification (or relevant work experience).

Participants wishing to undertake the course but not receive the Postgraduate Certificate are not required to have any formal qualifications.

ABOUT OUR PARTNER MIDDLESEX UNIVERSITY

HistoryMiddlesex University is a large London based university with a history in higher education dating from 1878. In 1992 it was granted the Royal Charter making it a university. The university offers a broad range of courses through four academic schools of Arts and Education; Business; Engineering and Information Sciences; Health and Social Sciences and their Institute for Work Based Learning.

Middlesex University has over 34,000 students studying on its courses worldwide, both at its own campuses and also with partner institutions, making it one of the largest providers of British university education to international students. Middlesex University has a long history of successful collaborations with the corporate sector. It was the first academic institution to develop industry specific MBA programmes (Shipping & Logistics and Oil & Gas) delivered 100% by distance learning.

INTERNATIONAL REACHMiddlesex University is committed to meeting the needs and ambitions of a culturally and internationally diverse range of students by providing challenging academic programmes. It has a major international business school based in London with overseas campuses in Dubai and Mauritius and a global portfolio of partnerships delivering high quality validated programmes in business and management.

Staff and students come from a wide spectrum of cultures and backgrounds with a common interest in executive education that is world class, modern and applicable. Middlesex University Business School is proud of its dedicated teachers and its rich range of learning resources including distance learning and virtual learning environments.

BENEFITS OF STUDYING FOR A POSTGRADUATE CERTIFICATE WITH US

A MIDDLESEX POSTGRADUATE CERTIFICATE:n Is project based and practicaln Offers networking opportunities during and

after the coursen Provides exceptional teaching staffn Delivers applied learning experiencesn Combines academic rigour with individual

support

HOW IS THE COURSE VALIDATED?*This programme is quality assured by Middlesex University and after successfully completing your studies you will receive a Postgraduate Certificate from Middlesex University. Middlesex Certificates are recognised worldwide.

QUALITYThe Quality Assurance Agency (QAA) visited Middlesex in 2015 and noted in its report that its auditors had confidence in the University’s current and likely future management of its academic standards and of the learning opportunities available to students.

THE UNIVERSITY IS A MAJOR PROVIDER OF BUSINESS AND MANAGEMENT EDUCATION, WITH AN IMPRESSIVE TRACK RECORD OF WORKING IN PARTNERSHIP WITH THE PUBLIC AND THE PRIVATE SECTOR, AS WELL AS INTERNATIONAL ORGANISATIONS

IFF is the learning partner of

THE MECHANICS OF

PROJECTFINANCEPOSTGRADUATE CERTIFICATEDELIVERED BY DISTANCE LEARNING OVER 16 WEEKS

Contact:www.iff-training.comTel: +44(0)20 7017 7190Email: cs@iff-training.com

Duration:16 Weeks

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