Project Financing techniques for
corporate borrowers

Overview

One of the principal challenges facing bankers in lending to corporate clients is forecasting the impact of risk on the company’s operations going forward and how this risk crystallisation will impact the company’s cash flows and it ability to repay the Bank.

This course is designed for corporate bankers who are interested in financing corporate client project development, on a ring fenced, stand-alone basis, without relying on the security inherent in the company’s cash flows and balance sheet and without exposing the bank to the potential management and other risks normally inherent in client corporates. It focuses on how we can finance specific projects and rely therefore on the cash flows generated from the individual project rather than on the client’s wider trading activities where volatility of cash flow can be high.

During this course, the delegates will assess the cash flows that are generated directly from the development of a new project which will act as the bank’s primary source of repayment for the development of the company’s expansionary project. The emphasis will be to provide corporate financing with a heavy emphasis on project performance and cash low and with far less reliance on a claim or fixed charge taken on the assets of the company. This is particularly important with relatively new SMEs or trading and other companies that are ‘fixed asset light’.

As part of this course, we will examine how the bank will structure the project development into a separate special purpose vehicle which will provide the cash flows for the repayment of the debt financing for the project.

This course is designed for Corporate Bankers and Relationship managers who are looking to ring fence the overall corporate risk post by the client and it’s management by financing expansion of the company on a stand-alone, limited recourse, project finance basis. It is also a highly useful course for Risk Managers who are exposed to corporate financing as it will provide them with a detailed understanding of methods in limiting credit risk exposure through debt ring fencing.

Attendees with over three years banking and corporate debt experience would most benefit from this course.

Objectives
  • To allow the corporate banker to understand the principles of project financing for new project development;
  • To introduce the debt provider to limited recourse financing relying on the cash flow generation of the client’s new project;
  • Reviewing and understanding the components of the project feasibility;
  • Review of the practical steps that the corporate banker can undertake as part of their management due diligence to understand the management’s potential in developing their project, their capabilities and the overall potential success of the company’s expansion strategy;
  • Assessing investment appraisal techniques for new project development, including NPV and IRR;
  • Assessing potential future opportunities and risks arising from the development of the project and assessing the impact on company performance of the exploitation of those opportunities and the potential crystallisation of some of those risks.