Advanced Modelling for Project Finance

Description of Advanced Modelling for Project Finance

Let a seasoned project finance professional guide you through to pricing and negotiating a project finance deal with the model with this new workbook.

Learn to look at the financial modeling from a more critical point of view. The Advanced Modelling for Project Finance workbook features worked examples of building and analysing each step of the project finance model, so you completely understand the process.

Test your knowledge with 31 exercises. Each exercise has their own correlated answer page and review, and complete with CD Rom supported material.

Advanced Modelling for Project Finance workbook provides you with :

• An overview on project finance, contracts, risks and their relationship with the model.
• A refresher on the essential model conventions, layouts, techniques and audits with a quick checklist to advanced use of Excel - become a mouseless user of Excel!
• A review of project economics, ratios, financial mathematics for tariff structures and their relationship with infrastructure cash flows - includes mechanics of
• off-taker purchase;
• capital recovery;
• unit prices;
• market fundamentals;
• DCF;
• NPV;
• WACC;
• CAPM;
• and, IRR.
• Building the model:
• assumptions;
• construction;
• insurance;
• taxes;
• depreciation;
• financings;
• income statements;
• balance sheets;
• cash flow;
• retained earnings;
• equity returns;
• coverage ratios;
• and, present values.
• Advanced analysis and negotiation techniques, including:
• due diligence of analyzing the project's ability to support interest rates and gearing;
• downside, base, and upside cases;
• use the model to price and negotiate the deal.

5 in-depth modules

Electronic component (extensive Excel worked examples)

Level - intermediate - advanced.

Table of Contents Advanced Modelling for Project Finance

Module 1: Project Finance Overview

1. Introduction
2. Definition Of Project Finance
3. Brief History
4. Corporate Finance Versus Project Finance
5. Rationale For Project Finance
1. Equity
2. Debt
3. Suppliers
4. Government
5. Appropriate Project Size
6. Project Timelines
7. Risks
1. Supply Risk
2. Market Risk
3. Currency, or Foreign Exchange, Risk
4. Operation Risk
5. Environmental Risk
6. Infrastructure Risk
7. Force Majeure Risk
8. Completion Risk
9. Technology Risk
10. Political Risk
11. Financial Risk
1. Interest Rate Risk
2. Creditworthiness
3. Syndication Risk
8. Structures
9. Contracts and Documents
1. Construction Contract
2. Feedstock, or Fuel Supply Contract
3. Off-Take Contract
4. Operations and Maintenance Contract
5. Shareholder's Agreement
6. Financing Documents
10. Summary

Module 2: Modeling Conventions and Advanced Excel Techniques

1. Introduction Points on Excel
1. Mouseless Excel
2. "Alt" Key
3. Fonts and Symbols
4. "Ctrl" Key
5. Summary of Shortcuts
2. Model Layout
3. Coding Exercises
1. The Paste Formula Function
2. Sum, Min, Max and Average
3. Logic Functions
4. Escalation Coding
5. Flag Technique
6. Transpose
7. Payment Function
8. Sum(Index) Function
9. Goal Seek
10. Tables
11. Vlookup and Hlookup
12. Conditional Formatting
13. F9 Manual Calculations
4. Summary

Module 3: Project Economics and Selected Financial Math

1. Introduction
2. Microeconomics
1. Capacity Payments
 
2. Variable Costs
3. Average Unit Costs
4. Financial Engineering
3. Market Fundamentals
1. Market Pricing
2. Project Pricing
4. Time Value of Money ("TVM")
5. Risk versus Reward
6. Discounted Cash Flow
1. Net Present Value ("NPV")
2. Weighted Average Cost of Capital ("WACC")
1. Capital Asset Pricing Model ("CAPM")
3. Internal Rate of Return ("IRR")
4. NPV versus IRR
7. Continuing Value
8. Terminal Value
9. Purchasing Power Parity
10. Summary

Module 4: Workbook Case Study

1. Introduction
2. The Project
1. Executive Summary
2. Project Description
3. Project Structure
4. Project Costs and Capitalization
5. Project Time Schedule
6. Lump Sum Turnkey Engineering, Construction & Procurement Contract ("LSTK EPC")
7. Power Purchase Agreement ("PPA")
1. The Capacity Payment
2. The Energy Payment
8. Gas Supply Agreement ("GSA")
9. Operations & Maintenance ("O&M") Agreement
10. Additional Information
11. The Sponsor/Developer
12. Selected Review of the Project Documents
1. General Information
13. General Development Costs and Information
14. EPC Contract Tariff Sheet, Delivery Time Schedule, & Performance Guarantees
15. Power Purchasing Agreement
16. Gas Contract
17. Operations & Maintenance (O&M) Agreement
18. Insurance Premiums for both Construction and Operation Phases
19. Host Country Tax Regime
20. Term Sheet presented by the Project Company
3. Exercise and Review 1 - Assumption Page
4. Exercise and Review 2 - Operations Page
5. Exercise and Review 3 - Construction Debt and Interest During Construction ("IDC")
6. Exercise and Review 4 - Insurance Package
7. Exercise and Review 5 - Taxes
8. Exercise and Review 6 - Depreciation
9. Exercise and Review 7 - Debt Amortization Schedule
10. Exercise and Review 8 - Annualised Debt
11. Exercise and Review 9 - Income Statement
12. Exercise and Review 10 - Balance Sheet
13. Exercise and Review 11 - Statement of Cash Flows
14. Exercise and Review 12 - Returns and Ratios
15. Exercise and Review 13 - Present Value of The Loan
16. Exercise and Review 14 - Summary Page
17. Summary

Module 5: Due Diligence of Case Study

1. Introduction
2. Project is Seeking Financing
3. Exercise and Review 1 - Operational Changes
4. Exercise and Review 2 - Financing Changes
5. Exercise and Review 3 - Market Changes
6. Exercise and Review 4 - Contingency Changes
7. Exercise and Review 5 - PPA Re-Negotiation Changes
8. Exercise and Review 6 - Creating Tables for Negotiations
9. Summary

Author Biography:

Charles is the Managing Director of The Vair Companies, an advisory firm on project development and valuation, with offices in Atlanta and Amsterdam. Vair has advised several banks, equity players and developers worldwide on project development, contracts, feasibilities, economics and valuation.
Prior to Vair, Charles worked in Project Development and Finance with Mirant Europe and Wärtsilä NSD. As a graduate student, he interned with the Overseas Private Investment Corporation in Washington and the Foreign Commercial Service Division of the U.S. Department of Commerce, in Lima, Peru.

He is a frequent lecturer and instructor on financial modeling, with an emphasis on valuation and project finance. Charles has a BA in Economics and French from Hanover College, and a MA in French from Middlebury College and a MIM in International Finance and Accounting from Thunderbird, The Garvin Graduate School of International Management. He is US citizen, living in Atlanta and Amsterdam with authorisation to work in EU, is fluent in French and Spanish and strong working knowledge of many other European languages.