Project Finance Modelling

Transcription

1 Project Finance Modelling A Two-Day Practical Workshop This course is presented in London on: January 2019 This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist

2 Course Objectives By the end of this course, participants will be able to: Understand the key participants and strategic objectives of project finance; Develop good project finance model structure and design; Master the steps to take to build up the model; Develop the key construction and operational assumptions; Understand the financing structure, key debt covenants and required equity returns. Course Overview Course Content Introduction to Project Finance Long-term infrastructure, industrial projects and public services Non-recourse or limited recourse structure (Special Purpose Vehicles) Public-Private Partnership (PPP) Key parties involved: promoter, constructor, off-taker, debt finance, equity sponsor, etc. Debt ratios (Debt Service Coverage Ratio, Fixed Charge Cover, etc.) Sponsor return criteria (unlevered and levered Internal Rate of Return, payback period, etc) Role of Project Finance Model Calculate viability of sponsor return and debt coverage ratios Review of key contruction assumptions Discussion of operational assumptions Review of main financial assumptions and debt waterfall Introduction to the A65/E7 Project Construction of a 150 kilometers highway in south-west of France (1,490 hectares of land) 55-year concession given by the French government to A lienor Consortium held at 65% by Eiffage and 35% by Sanef Overall Model Assumpotions Real growth and inflation: revenues, capex and expenses Construction phase, operation phase with use of flag periods Modelling Construction Phase Project cost: 1.2 billion Construction period: 2 years Capex build-up: maintenance and expansion GAAP straight-line depreciation and tax based on double-declining balance Operational working capital build-up prior to operational phase Pre-operational capitalised costs Debt capitalised interests Project delay: how could we design the model to accommodate delays? Modelling Operation Phase - Revenues Sources of revenue: volume and price Capacity build-up during operational phase 5,000 to 9,000 vehicles per day Monthly seasonality to be build-up per crossing or per kilometer

3 Escalating revenues: pitfalls in escalation factors Modelling Operational Phase - Expenses Variable costs: labor and energy costs Fixed costs: management and head office, sales and marketing Escalating expenses; real and nominal growth Modelling Taxes Effective tax rate based on taxable profits build-up Net operationing losses and deferred tax assets until full revenue capacity Deferred tax liabilities as difference between book and tax depreciation Modelling Capital Structures Sources and uses of funding during construction phase 20% equity financing by project sponsor/infrastructure funds/sovereign wealth funds Revolving credit facility to finance Operating Working Capital during construction Fees on the deal: interest, commitment fees on undrawn amount, PIK interest during construction Mapping out a capital structure during the operational phase Mix of bank debt and bonds Base rate and spread Amortising tranche and cash sweep Estimating and optimising debt capacity Modelling of Revolving Credit Facility (RCF) Linking to other statements and cash flow available for debt service (CADS) Key ratios/debt covenants: Debt Service Coverage Ratio (DSCR), Loan Life Coverage Ratio (LLCR), etc Project Appraisal Investment appraisal crash course How is DCF calculated in a project model? Why do we discount? How is the discount rate determined? How is NPV calculated? Project/unlevered and equity/levered Internal Rate of Return (IRR) Sensitize IRR and money multiple to obain desired returns based on key drivers, phasing up front capex within the model Summary Stress-test the model Develop scenarios Participants to compute various changes based on revised operational and financial data

4 Background of the Trainer The trainer has more than 20 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French. Course Summary This training will provide participants with the skills and techniques necessary to understand, analyse and model a project finance project. The session includes a detailed project financial model of a European highway E65/E7 in the south-west of France including construction and operational phases and related financing. Case Study: The participants will use a French highway project finance model during the two days, based on publicly available information. Participants will be required to bring a laptop to the course. 09:30-17:00 London Standard Price: 1,300 + VAT Membership Price: 1,040 + VAT

5 In-House Training Delivering this course in-house for a number of participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar. Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.