Project & Infrastructure Finance: Mastering the Financing Documentation Suite

2 Part Course | Advanced strategies for negotiating critical finance agreements from term sheets to financial close

Close-up of the blue artichoke flower that shows its intricate detail

A one-day Project & Infrastructure Finance course presented over two-half days in a virtual class from 9:00am to 1:00pm UK time

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Download: Course Category Brochure | Course Outline

Part One

Anatomy of a Project Finance Transaction

Overview of the main agreements in a project financing
Key players and their roles
Review of the Contractual/Project Framework
Review of various types of Project Delivery methods
Bankability – what makes a project “Bankable”?

Principal Finance Documents: Summary

Project & Infrastructure Finance training explores the Confidentiality Agreement
The Preliminary Information Memorandum (“PIM”)
The Term Sheet
The Mandate letter
Commitment Letter
The Senior Facilities Agreement
Security Documentation
Monoline Insurance
Sureties
Equity Contribution Agreement
Shareholders’ Agreement
Common Terms Agreement (“CTA”)
Intercreditor Agreement
Hedge Agreements

Key Legal Issues

Choice of law – jurisdiction and governing law
English approach vs Civil law (Haviltex principles)
Best vs reasonable efforts – where and why it matters
Interpretation of contracts - Importance of clarity
Challenges in harmonising Sharia law with Global Project Finance Practices:
- Sharing security
- EoDs/enforcement challenges
- Cash flow waterfall
- Navigating regional variations in Islamic finance practices e.g. hedging, derivatives, forward contracts, options

Common Terms Agreements

Use and application
“Typical’ coverage (note these are highly bespoke)
Advantages of using
Challenges in implementing
Relationship with other documents

Direct Agreements

Parties and rationale
Key negotiating points
Step-in and associated rights (assignment and replacement of SPV)
Cure and extended cure rights
Consent rights
Acknowledgement of Security
Reps and Warranties from third parties
Payment redirection

The PIM: Rationale & Role

Rationale & role in the deal – why the PIM matters
First steps - Confidentiality Agreement and key issues
“Typical” information:
- Participants and key contacts
- Financials
- Financial Coverage ratios
- Draft Term sheet
- Due diligence and other reports
- Draft mandate letter
- Inviting bids - to syndicate or not?
Commercial considerations:
- How detailed the Term Sheet should be - pros and cons
- Meetings with potential lenders – can they help?

Term Sheet

Main headings (overview)
Strategy - how detailed should the Term Sheet be?
- Pros and cons
- What are the key factors in opting for detailed vs skeleton term sheet
Is it legally binding, if so which clauses & why?

The Mandate Letter - Key Commercial & Negotiation Issues

Infrastructure project finance training assesses the key differences between the Mandate letter and the Commitment letter
Role and relevance
Who are the parties?
Key commercial/negotiation issues in the Mandate letter:
- Sole and exclusive mandate
- Hard underwrite, best or reasonable efforts (note dangers of best efforts in the UK)
- CPs for a “hard” or ‘best efforts’ underwrite
- MACs – how relevant are they?
- “Agreement of Documentation” key points
- “Clear market” – role and relevance
- Final Credit committee approval required?
- Market flex – what to look for
Sponsor CPs
Fees
Termination

Commitment Letter – Issues for Lenders

Key issue for Lender (hint: it may be legally binding on lenders to fund)
Standard CPs; lessons from Novus Aviation (unsigned letters may be binding)
Costs & expenses caps
Fees; lessons from ING v Ros Roca case
Syndication & IM
Market flex – what to look for
What can be flexed?
When does ‘flex’ end (close of syndication?)
Other terms “enhance...prospects of success”

ESG Considerations: Overview (Why it Matters)

ESG in Project Finance Documents:
- ESG covenants in loan agreements
  - ESG-linked margin ratchets
- ESG reporting requirements
- ESG-related events of default
Environmental Considerations:
- Climate risk assessment and mitigation strategies
- Carbon footprint reduction and offsetting mechanisms
- Biodiversity impact and conservation measures
- Sustainable resource management (water, energy, materials)
Social Considerations:
- Community engagement and impact assessment
- Labour rights and working conditions
- Indigenous peoples' rights and cultural heritage protection
- Health and safety standards

Technology: Increasing Role in Project Finance (e.g. Blockchain)

Blockchain and smart contracts:
- v World Bank’s bond-I issued using blockchain
- BBVA Red Electrica’s - first syndicated loan on the blockchain
Supply chain management
ESG monitoring
Tokenisation of project assets

Part Two

The Senior Facilities Agreement (SFA): Key Terms

Document structure and precedent (LMA influence)
Facilities Overview – use and application (not all present in every deal):
- Term loan/Construction/Baseline facility
- Standby facility
- Equity bridge facility
- Change of law facility
- VAT facility
- RCF/working capital facility
- LC facility
- Cost-over-run facility
- ECA facility
- Bonding
Term/Tenor considerations:
- Life of concession
- The estimated useful life of the asset
- Mini-perms
Examples and solutions
Risk mitigating strategies
Repayment profile
- Mortgage/annuity repayment style
- Percentage of available cash flow
- Level repayment
- Structured (uneven)
- Royalty basis
- Bullet repayment (rare)
Reserve styles - use and application:
- Debt service reserve
- Maintenance reserve
- Capex reserve
- Environmental/reinstatement reserve
- Tax reserve
Margins and yield protection:
- Margin ratchets
- ESG ratchets
- Gross up
- Mandatory costs
- Increased costs
- Call protection
- MFN & sunsets (relevant in expansion or phased projects)
- Yank the bank
Key voting thresholds and why they matter:
- Unanimous consent
- The majority lender concept
- Supermajority
Covenants/undertakings structure – Europe vs US format
Information covenants (coverage):
- Budget, Annual Report
- Reporting (Construction, Completion, Operating)
- Reporting Standard
- Site Access
- Inspection of records
- Compliance Certificates, Sweeper clauses, Notices
General Undertakings (summary):
- Negative Pledge
- Environmental compliance
- Compliance with all laws and regulations
Financial Maintenance covenants – pros & cons, use and application:
- ADSCR (Annual Debt Service Coverage Ratio)
- Loan Life cover
- Project Life cover
- Drawdown cover
- Other less common financial covenants (Debt/Equity)
Equity cures:
- Timing
- How are they implemented?
- How many over-loan life
- Cash retention vs debt repayment
- Look back or forward?
Events of Default (key EoDs only); Key negotiating issues:
- ‘Evergreen’ Reps & Warranties
- Force majeure
- Materiality thresholds (as in material breach)
- Grace periods – typical periods
- Cross default vs cross acceleration – materiality thresholds
- Deemed cures

Security, Guarantees & Credit Support

Project & Infrastructure Finance training explores the idea of taking security in project finance transactions:
- Key considerations – controlling the project, the influence in distress
What security is available?
- Project level – typical coverage & problems
- Shareholder – typical coverage & problems
- The ‘ideal’ security package for lenders
- Quasi security
Guarantees
Negative pledge
Sponsor support:
- Completion guarantees
- Specific issues and pitfalls in foreign jurisdictions
Bonds (summary and overview):
- Tender guarantees or bid bonds
- Advance payment guarantees or bonds, or bonds for offsite goods and materials
- Performance guarantees and bonds
- Retention and maintenance retention guarantees or bonds
- Difference between "On-demand" bonds vs Guarantees
Monoline Insurance
Suretyship
Step in rights

Intercreditor/Subordination Agreements

The payment waterfall
Cash traps:
- DSCR
- Release
- Priority
Release of Security
Enforcement standstills
Turnover clause
Finally, project & infrastructure finance training explores step in rights

Redcliffe’s Project & Infrastructure Finance course is delivered by a distinguished consultant, public speaker, and author with extensive global experience in project and infrastructure finance. His expertise spans EMEA and APAC regions and has delivered bespoke training programmes and public seminars on project & infrastructure finance, private equity, debt finance, loan documentation, and restructuring to blue-chip clients worldwide. His international speaking engagements include conferences across the UK, Europe, Australasia, North America, China and South Africa.

For over 18 years he was the Programme Director for the infrastructure/project finance module, MBA elective, at the Bayes Business School in London and has presented programmes for a host of high-profile clients.

His practical experience includes involvement in high-profile deals in South Africa, such as:

BMW 3 series project
Ford Sierra project
Opel Kadett project for General Motors
E18 Motorway (Finland)

He remains actively involved in the field through his ongoing consultancy roles:

Senior Advisor to KPMG Finland
Senior consultant with Grant Thornton UK (Debt Advisory)

Redcliffe’s Project & Infrastructure financing course expert is a qualified Chartered Accountant and Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW). He holds various degrees including BA, LLB and a B Compt. Accountancy (Hons).

Upon completion of this project & infrastructure finance course, participants will be able to:

Evaluate and negotiate critical clauses in project finance agreements, with a focus on the Senior Facilities Agreement, from both lender and sponsor perspectives
Assess the strategic importance of preliminary documents, including the Preliminary Information Memorandum, the Mandate Letters and Commitment Letters, and their impact on the final Senior Facilities Agreement
Craft strategic Mandate Letters, addressing key issues such as exclusivity, nature of underwriting, market flex provisions and credit approval sought
Develop comprehensive Commitment Letters that build upon the Mandate Letter, including detailed conditions precedent, fee structures, and syndication strategies
Redcliffe’s infrastructure project finance courses analyse the structure and application of Common Terms Agreements, understanding their role in standardising terms across multiple finance documents and streamlining negotiations
Evaluate the critical role of Direct Agreements in project finance, including step-in rights, consent rights, and their importance in protecting lenders' interests
Identify and resolve the documentary and security challenges in harmonising Sharia law with common and civil law practices in project finance transactions
Design and implement effective intercreditor arrangements, including payment waterfalls, enforcement standstills, and voting mechanisms in multi-source project financing
Assess the bankability of projects across various sectors and jurisdictions, applying current market standards and best practices
Develop effective strategies for term sheet preparation, weighing the pros and cons of detailed versus skeleton formats, and understanding their implications for subsequent negotiations
Infrastructure project finance training will analyse and structure complex project finance transactions, identifying key risk allocation mechanisms and their documentation
Craft robust finance documents that anticipate and mitigate potential disputes throughout the project lifecycle
Design and implement effective security packages in project finance transactions
Integrate ESG considerations into project finance documentation, including ESG-linked margin ratchets and covenants
Develop strategies for successful project refinancing, including the structuring and negotiation of mini-perm facilities
Apply advanced negotiation techniques to achieve optimal outcomes in project finance transactions, balancing the interests of multiple stakeholders
Evaluate the impact of technological advancements, such as blockchain and IoT, on project finance structures and documentation

The following will benefit from Redcliffe’s Project & Infrastructure Finance courses:

Legal Professionals:
- Senior associates and partners in law firms specializing in project finance
- In-house counsel at financial institutions, infrastructure companies, and energy firms
- Legal advisors to government bodies involved in PPP projects
Banking and Finance Professionals:
- Senior project finance bankers
- Structured finance specialists
- Investment bankers working on infrastructure deals
- Credit risk managers in project finance departments
Investment Professionals:
- Infrastructure fund managers
- Private equity professionals focusing on infrastructure and energy sectors
- Institutional investors (e.g., pension funds, insurance companies) involved in project finance
Corporate Finance Executives:
- CFOs and finance directors of companies undertaking large infrastructure projects
- Treasury managers dealing with project finance transactions
Public Sector Officials:
- Senior government officials involved in PPP / PFI-style projects
- Regulators overseeing infrastructure development
Advisors and Consultants:
- Financial advisors specializing in infrastructure and project finance
- Management consultants working on large-scale project implementations
- Independent technical advisors in project finance deals
Multilateral and Development Finance Professionals:
- Project finance specialists at multilateral development banks
- Investment officers at export credit agencies

Project & Infrastructure Finance: Mastering the Financing Documentation Suite is an advanced, intensive one-day course designed for experienced professionals involved in the project and infrastructure finance sectors.

This comprehensive and highly practical program delves into the intricacies of negotiating the key finance agreements in these projects, with a strong emphasis on key commercial issues throughout the transaction lifecycle.

The course examines these agreements from both sponsor and lender perspectives, providing a balanced and thorough understanding of each party's interests and objectives. Participants will gain invaluable insights into developing effective Term Sheets, structuring comprehensive Senior Facilities Agreements, navigating Common Terms Agreements, mastering the nuances of Intercreditor arrangements and understanding the key role of the Preliminary Information Memorandum.

Project & Infrastructure finance training will explore how to structure robust security packages at both the project and the sponsor level, with a particular focus on lender considerations.

We address the challenges of cross-border transactions, including the harmonisation of Sharia law with international project and infrastructure finance practices. It also covers important contemporary topics such as ESG integration in finance documents, the potential impact of technological advancements, and strategies for successful project refinancing. Through a blend of expert instruction, real-world case studies, and interactive discussions, attendees will enhance their ability to design effective security packages, allocate risk effectively, anticipate potential disputes, and balance diverse stakeholder interests in complex deals.

Tailored for lawyers, banking and finance professionals, investment managers, corporate finance executives, consultants and other parties involved in this sector; this project & infrastructure finance course offers a valuable opportunity to gain a deeper understanding of current market practices and refine advanced negotiation techniques. The practical focus ensures that participants will emerge with a sharpened skill set and a comprehensive grasp of the intricate aspects of project and infrastructure finance, including crucial security considerations.

Attendees will be ready to apply their learning directly to complex transactions and deliver optimal outcomes in this dynamic and challenging field.

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(min. 50 participants)