Finance Agreements in Project Finance

2 Part Course | Learn from a comprehensive guide & examination of the various financing agreements used in a typical project finance transaction

A corporate headquarters building with the Citi and BCX corporate offices in it

A one-day course presented over two-half days in a virtual class from 9:30am to 1:00pm UK time or 14:00-18:00 UK Time

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Download: Course Category Brochure | Course Outline

Part One

Introduction

The key characteristics of project financings;
The inter-relationships of all of the contracts and the counterparties;
Debt sizing project finance;
The law of the contract;
Jurisdiction;
Alternative Dispute Resolution procedures;
The 1958 New York Convention.

Issues relating to all Contracts

The trend toward standardisation of project finance documentation;
Circumstances where contracts are unenforceable:
- Ultra vires;
- Absence of Consideration;
- Intention;
- Uncertainty;
- Illegality
Ostensible Authority;
Electronic signatures;
Set off;
Appropriations;
Severance clauses;
The principle of compensatory monetary damages;

Project Financing Credit Agreement

The loan syndication process in project financing;
The architecture of the project loan agreement;
Significance of Representations andWarranties;
The role of the project cashflow model;
The role of the Agent Bank in syndicated loan financing;
Prepayments and refinancing;
Confidentiality – banks, non-bank financial institutions;
Snooze and lose provisions;
Circumstances where individual lenders can be prepaid;
Unanimous lender consent issues;
- Super-majorities;
- ‘yank-the-bank’;
Market disruption:
- Absence of benchmark rate;
- Funding costs exceed benchmark;
Replacement of LIBOR – SONIA, SOFR;
Sell-downs – novation’s, assignments, sub-participations;
Compliance certificates;
Implications of default;
Contractual enforcement issues;
Implications of Sarbanes Oxley Act 2002, if applicable;
Lockup covenants;
Bond trust deeds;
The pros and cons of bond financing vs loan syndication (syndicated loan process).

Part Two

Security Documents

The correct law and jurisdiction;
The importance of legal opinions;
Classification of security types;
A typical project financing security structure;
Why security is not usually essential in project financing;
Implications where the assets are moveable and/or the lenders wish to remove the Sponsors;
Why project financings don’t go into insolvency;
Rescheduling’s and restructurings;
Extractive industries – preventing tangible security with UJVs and bankruptcy remote vehicles;
The role of the Security Trustees agreement;
Fixed & Floating charges;
The purpose of Direct Agreements in project finance and Step-in Rights.

Accounts Agreement and Cover Ratio Calculations

The cashflow waterfall and its purpose;
The role of the Accounts Bank;
FCF and CADS;
Loan Life Cover and Annual Debt Service Cover;
The role of the project cashflow model;
The maintenance reserve;
The Debt Service Reserve;
The build-up contingency reserve;
When are cash sweeps justified?

Intercreditor Agreements

Relationship of senior and subordinated lenders;
Cashflow blockages;
Implications of default;

Guarantees – Completion & General

The conventional completion guarantee;
How its quantum should be determined;
The role of the Technical Bank;
Deficiency guarantees;
Some warnings about the enforceability of common law guarantees;
Guarantees vs indemnities;
Differences between Civil Law and Common Law guarantees;
Several -vs- joint & several;
On-demand -vs- shortfall guarantees;
“continuing security clause”;
Variations;
No competition;
Implications of the Statute of Frauds Act.

This finance agreements course trainer offers a unique blend of experience in Law, Corporate Banking, Investment Banking, Corporate Financial Management, General Management and Workout. He has gained a worldwide reputation for the quality and depth of his training courses which have been developed and presented over 20+ years.

He trained as a lawyer at Cambridge and the Middle Temple and was called to the English bar.
5 years with an American bank (Chase), the world’s largest financier of oil & gas projects, as a corporate relationship manager in New York and London. In the 5 years in this role, he was exposed to the development of the North Sea projects and petrochemicals.
6 years: investment banking in Hong Kong and London (Wardley – the investment bank subsidiary of HSBC), primarily involved in mergers and acquisitions and corporate restructurings.
6 years: CFO of a public group with a joint head office in the United States and Australia. In this role he was engaged in some 35 acquisitions, over 20 equity raisings and a large number of complex financings, many of them structured on a limited recourse basis;
18 months: responsible for the ‘workout’ of a company in severe financial difficulties, being appointed as General Manager by KPMG.

For the past 20 years, the trainer has acted as an independent consultant and financial trainer. On the consulting side, he has been primarily involved in the financial modelling and structuring of power generation, LNG, mining, and petrochemical projects, as well as undertaking project vetting of many clients. On the training side, he conducts training courses in Financial Modelling, Loan Documentation, Project Finance and Corporate Finance, Corporate Valuation and M&A.

Finance agreement training participants will gain a deep and practical understanding of the key clauses in each of the agreements, and the arguments on both sides of the negotiating interface.

Many other courses focus exclusively on the syndicated loan agreement or cover all of the operational as well as financial contracts involved in project financing. Our finance agreements in project finance training course looks across the range of contracts that will directly involve the project financiers – the project finance loan agreement, accounts agreement, intercreditor agreement, guarantees and security structures and documentation.

It has heavily practical application, from a trainer who has a diverse background in law, as a lender, and as a corporate borrower.

This is a comprehensive guide and close examination of the various financing agreements used in a typical project finance transaction. The first half-day of our finance agreements training starts with issues that are relevant to the enforceability of any contract governed by a common law system. In international project finance, the financing is likely to be governed by New York law (in the Western Hemisphere), or English law everywhere else. A treatment of the syndicated loan agreement facility follows and dominates the first half day.

The second half-day follows with a treatment of the other contracts – security, guarantees, inter-creditor, and accounts.