Project Financing, 8th Edition

The eighth edition is a fundamental and essential update to the seventh edition published in 2000. This new edition examines a comprehensive range of existing and newer topics that are relevant to project financing in 2012 and explores current trends in the project finance and leasing industries. Contributors are experienced academics and practitioners. Since the first edition was published, the financial markets have undergone tremendous upheavals and many new structures and instruments have been created to meet the financing needs of business. This edition considers the wider world of project finance, applicable to such diverse situations as venture capital and leveraged buyouts, and using new approaches such as Islamic finance techniques. The eighth edition is an essential and over-due update to the previous edition published in 2000. The eighth edition updates a comprehensive review of financial and related topics which are relevant to project financing in 2012 and explores current trends in financial modelling of a project, risk management and the private finance initiatives. This is a comprehensive and practical book full of advice and tips for successful project financing, including leasing, offering a clear, easy to understand guide to a complex area with examples. The topic coverage is well organized and complete moving from the fundamentals to the more complex issues. There is an extensive glossary to support readers. Finally the use of 12 practitioner case studies brings many of these complex issues to life. This is the new edition of the clear, easy-to-understand industry-standard text on project financing. With a good overview of a broad area and using principles of project financing to explain complex structures, this book includes lots of examples and case studies (including Eurotunnel, Dabhol, multiple Paiton deals and other recent deals along with subsequent developments) to show the concepts in use, examine outcomes and to ensure you understand important issues such as effective project structuring and financing, financial modelling for project valuation, and risk management. Substantially updated and expanded to provide the latest developments in all aspects of project financing. An important manual reference, this book is a must-have for every project financier’s desk. The text unites the domain of project financing with a wealth of project management techniques, supported by diagrams and charts and other pictorial features, where appropriate. All these supporting features facilitate a better understanding of the accompanying text for the reader. In many chapters there are diagrams to clarify the specific transaction structure discussed in the accompanying text. These diagrams enable the reader to get a very clear idea of the transaction structure, which is particularly useful where it is complex or unusual. There are also a number of checklists to assist stakeholders in the project and resource management of complex project financings. The new financial modelling chapters allow exploration of some of the pitfalls project models encounter, challenging the accurate replication of the project cash flows for stakeholders to evaluate. In the later new risk management chapters, worked examples are included to illustrate the techniques in practice. The new public private partnership/private finance initiatives chapter introduces readers to this new approach to public projects. References are made to useful websites throughout the text. Cases are included at the end of the main text to encourage examination of real-life examples of project financing in practice and also highlight specific issues of current interest. The book will be helpful to project finance sponsors, lawyers, host governments, bankers and providers of capital

Table of Contents

Chapter 1. An overview of project finance
Chapter 2. Criteria for a successful project financing
Chapter 3. Use of a financial adviser
Chapter 4. The offering memorandum
Chapter 5. Risks that a lender may assume
Chapter 6. Choosing a lead bank
Chapter 7. Contacting lenders and investors
Chapter 8. Credit risk appraisal
Chapter 9. Risk analysis of a project loan
Chapter 10. Types of capital and debt
Chapter 11. Sources of equity and debt
Chapter 12. Use of captive insurance and finance companies
Chapter 13. Instruments used in project financing
Chapter 14. Construction financing
Chapter 15. Term loans and private placements
Chapter 16. Industrial development revenue bonds
Chapter 17. Commercial paper and back-up credit facilities
Chapter 18. General principles of leasing and types of leases
Chapter 19. International leasing
Chapter 20. Financial models
Chapter 21. Financial modelling for different industries
Chapter 22. Overview of risk management
Chapter 23. Guarantees
Chapter 24. Controlling risk via risk-sharing derivatives contracts: futures and forward contracts
Chapter 25. Controlling risk via risk-sharing derivatives contracts: swaps
Chapter 26. Controlling risk via insurance-type derivative contracts: options, caps and floors
Chapter 27. Entities for jointly owned or sponsored projects
Chapter 28. Reserves-oriented financing and drilling funds
Chapter 29. Restructuring
Chapter 30. Public-private partnerships and the private finance initiative