The Mechanics of Project Finance Distance Learning Course

In partnership with Middlesex University Business school, this cutting edge course represents a new paradigm in project finance education. Comprised of six core units and two elective units (chosen from two potential elective paths) it offers participants at all levels in the project finance sector an outstanding opportunity to improve both their technical and theoretical skills.

COURSE PROGRAMME

Core 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 Elective Path A or Elective Path B:

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

Unit 1

An Introduction to Project Finance

• 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 the acceptance of risk
• Explore the impact of the credit crisis on project financing
  
  • in particular how lenders’ attitudes have changed

Unit 2

Qualitative Risk Identification, Analysis & Mitigation (A)

• 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 (where necessary) allocated to other parties within or outside the project structure

Unit 3

Qualitative Risk Identification, Analysis & Mitigation (B)

• 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 (where necessary) allocated to other parties within or outside the project structure

Unit 4

Quantitative Risk Analysis & Debt Sizing/Structuring

• 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 5

Documenting the Deal

• 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 and how the credit crisis has impacted on loan documentation

Unit 6

The Project Finance Time-Line & Project Finance Security-Taking

• Explain in detail the process of negotiating and documenting a limited-recourse financing and the way in which the steps (and their duration) have been impacted by the Credit Crisis
• 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

Elective Unit Path A - Module 1

Infrastructure Project Finance

• 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

Elective Unit Path A - Module 2

PPP/PFI Project Finance

• 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

Elective Unit Path B - Module 1

Oil & Gas/Mining Project Finance

• 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

Elective Unit Path B - Module 2

Conventional & Renewable Power Project Finance

• 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.

At the end of each unit there is an assessment that will allow you to benchmark your growth in knowledge and understanding. For those wishing to receive a Post Graduate Certificate from Middlesex University, an additional marked assignment of 3000 words will also need to be submitted. The assignment will be based on an on-going case study that runs throughout the duration of the course.