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Project Finance Documentation

Learn operational and financial documents encountered in limited recourse (i.e. project finance) transactions.

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

A two-day course presented in a virtual class from 09:30 to 17:00 UK Time

Day One

Project Finance Overview

It is important that we establish the key ingredients of limited recourse financings, as well as a perspective of how the various contractual arrangements interface with each other, to convert the physical infrastructure into a cashflow that can service financial commitments.

  • Project finance contrasted with corporate lending
  • The central role of contract
  • Risk allocation
  • The part played by security
  • Company, partnership, trust, joint venture and other entities – pros and cons
  • Perspective of the structure types in various projects
  • Availability projects distinguished from market risk projects

Law & Contractual Breach

Before we look at the individual contracts, there are certain issues relating to jurisdiction and enforceability that are common to all contracts.  Additionally, there are complications in being exposed to contracts to which a special purpose vehicle is a party, as distinct from contracts entered into by ‘normal’ companies.

  • Contracts that are required to be under local law
  • Why there has been a trend towards contract standardisation since 1993
  • Jurisdiction, sovereign immunity, enforceability
  • Conflict of laws
  • The importance of contract administration
  • The problems with litigation
  • The two rules of contract negotiation in limited recourse financings
  • Alternative dispute resolution, expert mediation, international arbitration

Sponsor Agreements

  • Withering clause
  • Rights of pre-emption
  • Sponsor lock-ins and range of structural choices
  • Corrupt gifts and payments

EPC Contracts

For the majority of projects, the pre-completion phase of greenfield projects is the point of greatest risk, therefore a sound understanding of the range of those risks and the techniques for managing them is essential to the optimal structuring of the project

  • Overview of the FIDIC silver book
  • Liquidated damages, caps, prohibition against punitive element
  • Policing damages – performance bonds, retention clauses
  • The “fixed price” clause
  • The control structures for variation and change orders
  • Pre-conditions to staged payments
  • Certification procedures – progress and cost-to-complete
  • Rights of rescission
  • Other termination rights and consequences
  • Completion guarantees
  • Two-phase financing
  • Contractor’s contingent redeemable equity
  • Latent defects and warranties
  • Force majeure
  • Blueprint release clause
  • Romalpas
  • Technology and logistics

Case Study #1 – Transport infrastructure
A transport infrastructure project that went badly wrong through mis-structuring of the financing, followed by a loan restructuring that was even more badly implemented!


Day Two

Offtake Agreements

There are three types of Revenue agreements – Concessions (for government-endorsed projects), PPAs (for thermal and renewables power generation), Offtake agreements (for industrial projects, telecoms and extractive industries).  There is overlap between each of these, so we start with the most generic – Offtake – and then graduate on to the two.

  • Price and volume
  • Payment profiles – e.g., take-or-pay, other ‘smoothing’ structures
  • Exclusions
  • Termination
  • Renogotiations
  • Hidden recourse in operational contracts

Power Purchase Agreements

Power is differentiated in that it is one of the few things that cannot be stored (in any conventional way), and the demand is exceptionally volatile.  Therefore, its sale and purchase involve additional features.  Since renewable technologies also have intermittency, there are material differences between thermal PPAs and renewables PPAs.  Power represents by far the largest sector that uses project finance.

  • Thermal PPAs
  • Why such thermal PPAs would not work for most renewable projects
  • Renewable projects in non-merchant markets
  • Priority dispatch
  • Curtailment & deemed generation
  • Maxima and minima thresholds
  • Termination rights
  • Force majeure
  • Metering and verifications
  • Deemed abandonment
  • The emergence of corporate PPAs
  • Case Study #2 – Power project
    A look at both a thermal and a renewables project to compare and contrast the structural and risk-allocation issues between power vs other sectors, and dispatchable vs intermittent generators

Concession-Based Projects

There are two types of Concession - those that drive the project’s Revenue, and those that grant a licence to operate, with the Revenue provided by the users of the infrastructure.  Again, whilst there is major overlap, there also important differences in both the drafting and the commercial implications of the structure.

  • Characteristics of BOT and PPP based projects
  • Pre-qualification
  • The tendering process
  • Warranties and indemnities
  • Change protocols
  • Information and audit access
  • Benchmarking and market testing
  • Change of law
  • Delay events
  • Relief events
  • Force majeure
  • Termination with and without fault
  • Various approaches to determining compensation
  • Step-in rights of grantor
  • Step-in rights of financier
  • Assignments and change of control
  • Handover
  • Case Study #3 – Pipeline
    In extractive industries it is commonly required to separate the financings of upstream, midstream and downstream to avoid the ‘contagion’ effect.  This case perfectly illustrates the use and the benefit of unincorporated joint ventures and bankruptcy-remote vehicles.

Lender Protection

  • The six “killers” in project finance
  • A classification of the various risk-management methodologies
  • Typical security structures
  • Direct agreements
  • General insurances – pre-completion and operational
  • Cut-through agreements
  • Non-vitiation
  • Assignments, loss payee
  • Political risk – insurance – convertibility, civil insurrection, expropriation
  • ECA political risk cover
  • A/B loan structures of MLAs

Features of Project Finance Loan Agreements -vs- Corporate Loan Agreements

  • Layout of the Agreement – definitions, conditions precedent, reps & warranties, undertakings, events of default, administration
  • The role of the project finance model;
  • The cashflow waterfall;
  • Why the financial covenants are different;
  • Lockup covenants;
  • Conditions precedent to Sponsor distributions;
  • Drawdown stops;
  • Classification of the methods of risk management.
  • The six protective mechanisms for special purpose vehicle

The Project Finance Documentation course trainer has 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 for a number of clients. On the training side, he conducts training courses in Financial Modelling, Loan Documentation, Project Finance and Corporate Finance, Corporate Valuation, M&A and PPA training.

It is intended that participants will leave the course with a thorough view of the purpose of each of the project finance contracts and how they interface to provide the all-important management of risk in limited recourse transactions.  The course also delivers a comprehensive body of reading and research materials, together with contractual templates, to aid participants on an ongoing basis after the training has concluded.

The training is approached from a practical viewpoint and delivered by a trainer who has a background in law, project finance lending, Sponsor investment and loan workout.  This is a range of relevant perspectives that allows the issues to be comprehensively covered.

This course would be most suitable for legal practitioners, executives at companies who are Sponsors of projects, relationship managers at financial institutions, credit analysts, and management consultants.

The course covers both the operational and financial documents that are encountered in limited recourse (i.e. project finance) transactions.  It covers the risks that those contracts are intended to address and the ways in which they are able to be managed.

Number of places:

£ 2380.00

Discounts available:
Virtual Class

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