Financing Agreements in Project Finance

With the general downturn in the global economy, the American power crisis, the crash of the hi-tech industry and recent global events, many banks and developers are re-examining their project finance pipelines. Europe, however, continues to offer interesting infrastructure opportunities particularly in power and transportation. International Financial Institutions (IFIs) also continue to work in developing countries and Eastern European countries in transition. You will analyse the current trend of 'keeping it simple' using basic project financing techniques involving syndicated lending, sponsor support and a full security package. You will ensure your project documentation remains bankable and understand why sponsors and commercial banks are also looking for political risk protection from IFIs. This course: Focuses on the different documents involved Analyses key provisions of project loan agreements Explores security, direct & sponsor support agreements Describes effective documentation techniques Reviews main covenant issues Supported by:
Day 1 Introduction What are financing agreements? Main particularities and typical provisions of each of the basic financing agreements will be analysed: – Loan agreement – Intercreditor agreement – Security documents – Sponsor support Dealing with International Financial Institutions Lenders of last resort/preferred creditors A loan & B loan Analysing the Loan Agreement The term sheet Overview of the structure and content of a syndicated loan agreement Key project covenants Workshop: Analysing a Project Loan Agreement Delegates will be split into groups (bank and borrower) using a checklist of loan agreement provisions and they will analyse a project loan agreement. They will be required to form a position on major provisions. Examining the Security Documents Representations and warranties Affirmative and negative covenants Events of default Explaining the Support Agreements The significance of support agreements The sponsor’s role Forms of support from sponsors Key provisions Day 2 The Role of the Project Documents Overview of what constitutes ‘project documents’ and their role in a project Lender’s perspectives as compared to sponsors and offtakers The Power Purchase Agreement Presentation of key issues of bankability in a power purchase agreement, including: Different structures available: take or pay, minimum take, merchant Entry into operation Site/existing assets Payment structures Payment security Step-in rights Termination Dispute resolution Workshop: The Power Purchase Agreement Delegates will be split into groups and will analyse provisions of a power purchase agreement to identify key areas of bankability. Turnkey Construction Contract Presentation of turnkey construction contracts and key issues of bankability, including: Single point responsibility Fixed price Date certain Liquidated damages for delay and performance Warranties Termination Dispute resolution Operation and Maintenance Agreements Presentation of key issues of bankability in O&M agreements Different structures available Guarantees Duration Dispute resolution Workshop: The Turnkey Construction Contract Delegates will be split into groups and will analyse provisions of a turnkey construction contract to identify key areas of bankability.