Project Finance

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Contents

Introduction

Origins of project financing

Definition of project finance

Extent of recourse

Why choose project finance?

Structuring the project vehicle

Key sponsor issues

Project implementation and management

Parties To A Project Financing

Parties and their roles

Project company/borrower

Sponsors/shareholders

Third-party equity

Banks

Facility agent

Technical bank

Insurance bank/account bank

Multilateral and export credit agencies

Construction company

Operator

Experts

Host government

Suppliers

Purchasers

Insurers

Other parties

Summary of key lenders’ concerns

Section 3 Project Financing Documentation

Role of documentation

Shareholder/sponsor documentation

Loan and security documentation

Project documents

Force majeure

Lender requirements for project documents

Section 4 Project Structures

Approach to financing

Bonds

Leasing

North Sea model

Borrowing Base model

“Build Operate Transfer” “BOT” model

Forward Purchase model

Section 5 Sharing Of Risks

Identification and allocation of risks

Ground rules

Categories of project risks

Section 6 Security For Projects

Approach of lenders

Reasons for taking security

Universal security interests

Scope of security

Third party security

Direct agreements

Host government support

Comfort letters

Governing law

Security trusts

Formalities

Problem areas

Section 7 Insurance Issues

Role of project insurances

Who insures?

Scope of cover

Problem areas

Protection for lenders

Broker’s undertaking

Reinsurance

Section 8 The Project Loan Agreement

Warranties, covenants and events of default

Project bank accounts

Appointment of experts

Information and access

Cover ratios

Governing law and jurisdiction

Completion issues

Section 9 Export Credit Agencies And Multilateral Agencies

The role of export credit agencies in project finance

An introduction to the G7 ECAs

The advantages of involving ECAs in a project

The OECD consensus

Departing from consensus

Categories of ECA support in the context of a project financing

The changing role of the ECA in project finance

ECAs and credit documentation