Chapter 1
Introduction and Overview
§ 1.01 Introduction
[1] Project Finance Principles
[2] Nonrecourse or Limited Recourse Debt
[3] Structure of, and Support for, Project Finance Transactions
[a] Project Contracts
[b] Sponsors
[c] Sources of Financing
[d] Key Participants and Contracts
[4] Project Finance Overview
§ 1.02 Scope and Types of Projects
[1] Worldwide in Scope
[2] Types of Projects
[a] Natural Resources
[b] Transportation
[c] Electricity Generating Plants
[d] Telecommunications
[e] Other Projects
§ 1.03 Risk Assessment, Mitigation and Allocation
[1] Country and Political Risks
[2] Legal and Regulatory Risks
[a] General Legal Framework
[b] Laws and Regulations Impacting the Project
[c] Change in Law Risk
[3] Currency Risks
[a] Foreign Currency Control Risks (Convertibility and Transfer)
[b] Currency Devaluation Risk
[4] Sponsor Experience
[5] Offtake Agreements; Revenue and Market Risks
[6] Experience of Project Contractors; General Contractual and
Counterparty Risks
[a] General Contract Risks
[b] Force Majeure
[7] Construction Risks
[8] Technology Risks
[9] Permit Risks
[10] Operational Risks
[a] Equipment Failure
[b] Operation Risks
[11] Environmental Risks
[12] Structuring the Transaction to Mitigate Risks
[a] SPE Project Company
[b] Credit Agreement Provisions
Chapter 2
Arrangements in the Host Country
§ 2.01 Introduction
§ 2.02 Local Counsel
§ 2.03 Agreements with the Host Country
[1] Memorandum of Understanding (M.O.U.) and Letter of Intent
[2] Formal Agreements
§ 2.04 Desirability of Legislative Approval
§ 2.05 Form of Legal Entity for the Owners
§ 2.06 Financial Obligations of the Owners
[1] Provision for Equity Capital
[2] Borrowings; Giving of Security
§ 2.07 Financial Obligations of the Government
§ 2.08 Site Acquisition; Zoning; Engineering
§ 2.09 Obligation to Construct the Project
[1] Description of the Initial Project
[2] Products to Be Produced
[3] Completion of the Initial Project
[4] Expansion Rights or Requirements
[5] Right to Acquire Raw Material Sources
§ 2.10 Importation of Materials and Equipment for Construction Purposes
§ 2.11 Production Charges and Prices
§ 2.12 Royalties in the Case of Natural Resource Projects
§ 2.13 Sale of Products Produced by the Project
[1] Offtake Agreements
[2] Local Market
[3] Export License Requirements
§ 2.14 Importation of Materials for the Operation of the Project
§ 2.15 Availability of Power
§ 2.16 Availability of Water
§ 2.17 Waste Disposal
§ 2.18 Communications
§ 2.19 Port and Harbor Facilities
§ 2.20 Transportation
[1] Shipping
[a] Use of National Lines
[b] Free Access to All Lines
[2] Rail
[3] Roads
[4] Freight Taxes
§ 2.21 Employees
[1] Expatriates and Consultants
[2] Employee Housing and Household Goods
[3] Employment and Training of Indigenous Workers
[4] Trade Unions
§ 2.22 Fiscal Provisions
[1] Tax Rate and Method of Calculation
[2] Exemptions from Taxes and Other Fiscal Charges
[3] Exemption from Customs Duties
[4] Tax Holidays
[5] Interest on Foreign Loans
[6] Keeping Accounts in a Foreign Currency for Tax Purposes
§ 2.23 Currency
[1] Exchange Control Consents and Exemptions
[2] Retention of Export Proceeds
§ 2.24 Other Assurances
[1] Non-Discrimination
[2] No Changes in Arrangements
[3] No Expropriation, Nationalization and Intervention
[4] Approval of Political Risk Guarantees
§ 2.25 Waiver of Sovereign Immunity
§ 2.26 Arbitration
§ 2.27 Force Majeure
§ 2.28 Term of Agreement
§ 2.29 Governing Law
§ 2.30 Local Investors
§ 2.31 Charitable Foundations and Scholarships
§ 2.32 Anti-bribery Statutes
§ 2.33 Public-Private Partnerships
§ 2.34 Build-Own-Transfer and Concession Contracts
Checklist
Chapter 3
Feasibility Study
§ 3.01 Description of Project
§ 3.02 Project Participants
§ 3.03 General Description of Proposed Agreements
[1] Governmental
[2] Agreements Between Participants
[3] Management Contract
[4] Financing Arrangements
[5] Site
[6] Contracts Involving the Sale of Finished Product
[7] Raw Materials Supply Agreements
[8] Construction Contract
§ 3.04 Capitalization Cost
[1] Capital Required
[a] Plant
[b] Anticipated Local and Foreign Project Costs
[c] Pre-operating Costs
[d] Working Capital
[2] Financial Assumptions
[a] Equity
[b] Debt
§ 3.05 Financial Projections
§ 3.06 Sales of the Project's Products
§ 3.07 Other Studies
Checklist
Chapter 4
Environmental Report
§ 4.01 Statutory Requirements
§ 4.02 International Standards
§ 4.03 Elements of an EIS
[1] Earth
[2] Air
[3] Water
[4] Plants
[5] Animals
[6] Energy and Natural Resources
[7] Environmental Health
[8] Noise
[9] Land and Shoreline Use
[10] Housing
[11] Aethestics
[12] Light and Glare
[13] Recreation
[14] Historic and Cultural Preservation
[15] Transportation
[16] Impact on Public Servicecs
[17] Utilities
[18] Project Alternatives and Mitigation
[19] Climate Change
§ 4.04 Required Governmental Approvals and Permits
§ 4.05 Existing Environmental Hazards
Checklist
Chapter 5
Information Memorandum
§ 5.01 Introduction
§ 5.02 Project Overview
[1] Background
[2] Ownership and Management
[3] Sponsors' Description
§ 5.03 Summary of Terms
[1] Borrower
[2] Loan Amount and Types of Loan Facilities
[3] Loan Managers
[4] Purpose
[5] Security
[6] Owners' Support for the Project
[a] Equity Funds
[b] Completion
[c] Excess Costs
[d] Management
[7] Final Maturity
[8] Drawdown Period
[9] Repayment
[10] Prepayment
[11] Cancellation of Commitment
[12] Currency Option
[13] Interest Rate
[14] Participation by Other Lenders
[15] Commitment Fee
[16] Working Capital Facility
[17] Letter of Credit Option
[18] Major Conditions Precedent to Initial Drawdown
[19] Major Conditions Precedent to All Drawdowns
[20] Major Covenants
[21] Events of Default
[22] Subordinated Loans
[23] Choice of Law
[24] Legal Counsel to Lenders
[25] Lender Agent
[26] Financial Advisor to Borrower
[27] Taxes and Other Deductions
[28] Documentation
[29] Confidentiality
[30] Nonrecourse
§ 5.04 Environmental Considerations
Checklist
Chapter 6
Credit Documents and Terms, and Types of Lending Institutions
§ 6.01 Financing Overview
§ 6.02 Credit Documents Overview
[1] Commitment Letter
[2] Credit Agreement and Indenture
[a] Credit Agreement
[b] Indenture
[3] Security Documents
§ 6.03 Common Credit Terms
[1] Definitions
[2] Loan Commitment
[a] Commitments
[b] Construction Loans
[c] Term Loans
[d] Standby Letter of Credit Facility
[e] Working Capital Facility
[3] Alternative Currency Options
[4] Interest Rate Options
[a] Base or Reference Rate
[b] Offshore Rate
[i] LIBOR
[ii] Cayman
[iii] Hibor
[c] CD Rate
[d] Fixed Rate
[5] Interest Periods
[6] Interest Rate Swaps and Currency Exchanges
[a] Interest Rate Swaps
[b] Currency Exchanges
[7] Change in Circumstances Affecting Rates
[8] Bankers' Acceptances
[9] Commercial Paper
[10] Loan Repayment and Prepayments
[a] Loan Repayment
[b] Mandatory Prepayments
[c] Optional Prepayments
[d] Early Termination of LIBOR Loans
[e] Early Termination of Interest Rate Swaps
[11] Collateral and Security
[a] Overview
[b] Project Assets
[c] Project Contracts
[d] Project Company Revenues and Onshore and Offshore Accounts
[e] Permitted Debt and Permitted Encumbrances
[f] Ownership Interests in Project Company
[12] Conditions Precedent
[13] Representations and Warranties
[14] Financial Reports
[15] Affirmative Covenants
[16] Negative Covenants
[17] Events of Default
[18] Fees
[19] Managers, Agent, and Reference Bank
[a] Syndications
[b] Agents
[20] Increased Costs
[21] Indemnity
[22] Applicable Law and Jurisdiction
[23] Nonrecourese
[24] Asignments and Participations
[25] Lender Approvals
[26] Notices and Miscellaneous
§ 6.04 Commercial Lending Institutions, Export Credit Agencies, Multilateral Lending Institutions and Regional Development Banks
[1] Commercial Lending Institutions
[2] Export Credit Agencies and Other Governmental Sponsored Financing Institutions
[3] Multilateral Lending Institutions and Regional Development Banks
§ 6.05 Contractor Provided Financing
§ 6.06 Publicly Offered Bonds
§ 6.07 Subordinated Debt
Checklist
Chapter 7
Security Documentation and Other Contracts
Supporting Project Financings
§ 7.01 Security for Repayment of Loans
[1] Overview of Revenue or Sales Contract
[2] First Priority Security Interests
§ 7.02 Owner's Support for Project Financings
[1] Nonrecourse or Limited Recourse Debt
[2] Equity Contribution
[3] Completion Guarantees
[4] Pledges of Ownership Interests
[a] Overview
[b] Pledge Agreements
[c] Voting Trust
[d] Diagram
[5] Forms of Equity Support
[a] Guarantee
[b] Standby Letter of Credit
§ 7.03 Security Documents
[1] Overview
[2] Documents Creating Real Property Liens
[3] Agreements Creating Security Interests in Personalty
[4] Agreements Relating to Control over Revenues and Accounts
[5] Itercreditor Agreement
§ 7.04 Revenue and Sales Contract
[1] Overview
[2] Take or Pay Contracts
[3] Take or Pay, If Product is Available
[4] Take and Pay Contracts
[5] Tolling Agreements
§ 7.05 Clauses Found in Take or Pay and Take and Pay Contracts
[1] Allocated Production Capacity
[2] Option and Reserve Production Capacity
[3] Standby Charge
[4] Minimum Periodic Payment
§ 7.06 Payments Procedures
Checklist
Chapter 8
Agreements Among Owners
§ 8.01 Legal Forms of a Project Company
[1] Overview
[2] Project Company Formation
[a] Overview
[b] Corporations
[c] Partnerships
[d] Limited Liability Companies
[e] Joint Ventures
§ 8.02 Key Terms in Ownership Agreements
[1] Ownership Interests
[2] Capital Calls
[3] Board of Directors, Executive or Management Committee, or Board of Managers
[4] Manager
[a] Reimbursable Costs
[b] Fees
[5] Annual Budget and Accounting; Reports
[6] Transfer of Ownership Interests
[7] Defaulting Owners
[8] Admission of New Owners
[9] Income Tax Matters
[10] No Partition
[11] Consequential Damages
[12] Right of Access to Project
[13] Governing Law
§ 8.03 Expansion Agreements
§ 8.04 Partnership Indemnity Agreements
Checklist
Chapter 9
Construction Contracts
§ 9.01 General
[1] Requests for Proposals
[2] Procurement of Long Lead Time Equipment
[3] Construction and Construction Management
[4] Fast-Track
§ 9.02 Fixed Price Contracts
§ 9.03 Cost-Plus-Fee Contract
§ 9.04 Cost-Plus-Fee with Guaranteed Maximum Price and Shared Savings Contract
§ 9.05 Construction Contract Including Contractor-Provided Financing
§ 9.06 Clauses Found in Construction Contracts
[1] Scope of Work
[2] Definition of Costs
[3] Fixed or Target Price
[4] Contractor's Representations and Warranties
[5] Performance of the Work
[6] Time of Completion
[7] Payments
[8] Title and Risk of Loss
[9] Bonds/Lien Claims
[10] Subcontracts
[11] Environmental Responsibilities
[12] Inspection, Completion, and Acceptance
[13] Termination
[a] For Cause
[b] For Owner's Convenience
[14] Defective Work
[15] Insurance
[16] Indemnities
[17] Changes in the Work
[18] Patents and Royalties
Checklist
Chapter 10
Electricity Generation Projects and Biofuels
§ 10.01 Introduction
[1] Overview
[2] Fossil Fuels
[a] Natural Gas
[b] Coal
[c] Cogeneration
[3] Renewable Energy Resources
[a] Wind Power
[b] Solar Power
[c] Hydroelectric Power
[d] Geothermal Power
[e] Biomass
[f] Biogas
§ 10.02 Financial Considerations
[1] Overview
[2] Renewable Energy Electricity Generation Projects
§ 10.03 Developing the Power Project
[1] Site
[2] Fuel
[3] Power Purchase Agreement or Tolling Agreement
[4] Interconnection Agreement
[5] Industrial Water
[6] Cooling Water and Discharge
[7] Plant Construction Contract
[8] Operations Contract
[9] Permits
[10] Assignment of Responsibility
[a] Permits
[b] Community Relations
[c] Negotiation of Contracts
[d] Reports
§ 10.04 Distinctive Agreements for the Electrical Power Generating Industry
[1] Joint Development Agreements
[2] Natural Gas Transportation Agreements
[3] Generation Interconnection Agreements
[4] Wastewater Acquisition and Discharge Agreements
§ 10.05 Renewable Energy Incentives
[1] Introduction
[2] Incentives Available in the United States
[a] Overview
[b] Federal Incentives
[c] State and Local Incentives
[3] Incentives Available in Other Countries
§ 10.06 Financing Electricity Generation Projects
[1] Overview
[2] Renewable Energy Resources
§ 10.07 Biofuels
[1] Overview
[2] Trading
[3] Bioethanol
[4] Biodiesel
Checklist
Chapter 11
Use and Financing of Sea Transportation
§ 11.01 Introduction
[1] Examples of Shipments by Bulk Carriers
[2] Examples of Shipments by Tankers
[3] Environmental Regulations
[4] The International Maritime Organization ("IMO")
[5] Risk of Loss and Liability; Insurance
[6] Cabotage Laws
§ 11.02 Dedicated Port Facilities
[1] Requirements
[2] Public Ports--Exclusive Use of Docks and Storage Areas Together with Easements to and from the Dock Both by Land and by Sea
[3] Private Ports
§ 11.03 Purchase of Vessels
[1] Newbuildings
[2] A Japanese Newbuilding
[a] Japanese Shipbuilders
[b] Japanese Shipbuilding Contract
[c] Consultant for Purchaser for Japanese Newbuilding
[3] The Korean Newbuildings
[a] Korean Shipbuilders
[b] Korean Shipbuilding Contract
[c] Purchaser's Representative for Korean Newbuilding
§ 11.04 Registration of Vessels
§ 11.05 Financing of Newbuildings
[1] Introduction
[2] Security for Financing
[3] Sources of Funds
[4] Other Methods of Financing
§ 11.06 Operating and Selling a Vessel
[1] Introduction
[2] General Agency Agreement
[3] Sale of a Vessel
Checklist
Chapter 12
The Mining Industry
§ 12.01 Introduction
[1] Historical Findings
[2] Recent Developments
[3] Large Mining Companies
§ 12.02 Metals and Other Products Found in Mining Properties
[1] Aluminum
[2] Cadmium
[3] Cement
[4] Coal
[5] Chromium
[6] Cobalt
[7] Copper
[8] Gold
[9] Iron Ore
[10] Lead
[11] Magnesium
[12] Manganese and Molybdenum
[13] Nickel
[14] Platinum Group Metals
[a] Platinum
[b] Palladium
[c] Rhodium
[d] Iridium
[e] Ruthenium
[f] Osmium
[15] Silver
[16] Tin
[17] Titanium
[18] Uranium
[19] Vanadium
[20] Zinc
[21] Non-Metal Mining Products
[a] Salt
[b] Diamonds
[c] Potash, Phosphate and Nitrogen
§ 12.03 Selection of Mining Sites
[1] Introduction
[2] Regulatory and Legal Risks
[3] Theories Related to the Acquisition of Mining Properties
§ 12.04 Mineral Exploration Activity
[1] Mineral Resouces and Reserves
[a] Mineral Resources
[1] Inferred Mineral Resource
[2] Indicated Mineral Resource
[3] Measured Mineral Resource
[b] Mineral Reserves
[1] Probable Mineral Reserve
[2] Proven Mineral Reserve
[2] Stages of Exploration
[a] Ownership Position
[b] Second Stage
[c] Third Stage
§ 12.05 Agreements Among Owners
§ 12.06 Sales of Ores
[1] Sale of Iron Ore in International Markets
[2] Sale of Other Ores
§ 12.07 Financing the Project
§ 12.08 Purchase of an Existing Australian Nickel Metals Company
Checklists
Chapter 13
PUBLIC-PRIVATE PARTNERSHIPS
§ 13.01 PPP Overview
[1] PPP Objectives
[2] Feasibility Assessment
[3] Types of PPP Transactions
§ 13.02 Structuring the PPP Transaction
[1] Analysis of Legal, Regulatory and Procurement Framework
[2] Technical and Economic Feasibility
[3] Risk Assessment and Allocation
§ 13.03 PPP Contract Terms and Types of PPP Contracts
[1] General Contract Terms
[2] Concession and Other Construction, Operation and Financing
Arrangements
[3] Service and Management Contracts
[4] Lease Arrangements
[5] Joint Venture Agreements
§ 13.04 PPP Tender Process
[1] Initiating the Procurement Process
[2] Interaction with Prospective Bidders
[3] Evaluating the Bids and Discussions with a Preferred Bidder
[4] Closing the PPP Transaction
§ 13.05 PPPs throughout the World
Checklist
FORMS ON CD-ROM
Form 1 Sample Letter of Intent
Form 2 Sample Master Agreement
Form 3 Sample Power Sales Contract
Form 4 Sample Power Sales Contract with a Public Utility District
Form 5 Sample Power Contract for up to 415 MW of Power
Form 6 Sample Water Purchase Agreement
Form 7 Agreement to Acquire Industrial Water
Form 8 Sample Railroad Siding Agreement
Form 9 Sample Description of Proposed Public/Private Partnership
Form 10 Sample Guidelines for Preparing Build-Operate-Transfer (BOT) Contract
Form 11 Sample Pipeline Financing Plan
Form 12 Sample Commitment Letter
Form 13 US Law Credit Agreement for Power Project
Form 14 English Law Loan Agreement for Ship Purchase
Form 15 Hong Kong Law Commercial Bank Credit Agreement
Form 16 Sample Open-Ended Indenture Trust
Form 17 Documentary Acceptance Credit Agreement and Security Agreement
for Eligible Bankers’ Acceptances
Form 18 Sample Eximbank Loan
Form 19 Sample ECGD Loan
Form 20 Sample Note Purchase Agreement (Contractor-Provided Financing)
Form 21 Sample Sponsor Subordination Agreement)
Form 22 Sample Pledge Agreement
Form 23 Sample Security Agreement
Form 24 Sample Depositary and Account Control Agreement
Form 25 Sample Collateral Agency and Intercreditor Agreement
Form 26 Sample Intercreditor Agreement
Form 27 Sample Long Term Sales Contract
Form 28 Sample Take or Pay Contract
Form 29 Sample Limited Liability Company Agreement
Form 30 Sample Management Agreement
Form 31 Sample Technical Services Agreement
Form 32 Sample Expansion Agreement
Form 33 Form of Balance of Plant Agreement for Wind Farm
Form 34 Form of Photovoltaic Solar Project EPC Agreement
Form 35 Sample Fast-Track Construction Contract
Form 36 Sample Agreement for Resident Project Representative for Fast-Track Construction Contract
Form 37 Sample Construction Contract (Cost Plus a Fee with a Guaranteed Maximum)
Form 38 Sample Form for Subcontractors in a Large Project
Form 39 Sample Pipeline Construction Contract (Contractor-Provided Financing)
Form 40 Sample Gas Distribution Transportation Service Agreement between Shipper and Receiver
Form 41 Sample Gas Transportation Operating Policies and Procedures
Form 42 Sample Generation Interconnection Agreement
Form 43 Sample Construction and Operation and Maintenance Agreement
Form 44 Sample Joint Development Agreement
Form 45 Sample Effluent Acquisition Agreement
Form 46 Sample Wastewater Discharge Agreement
Form 47 The Port Agreement
Form 48 Shipbuilding Contract for One Single Screw Ore/Bulk/Oil Carrier
Form 49 Consultancy Agreement
Form 50 Contract for the Construction and Sale of Self-Elevating Jack-Up Drilling Units
Form 51 First Preferred Ship Mortgage
Form 52 General Vessel Agency Agreement
Form 53 Ship Sales Agreement
Form 54 Bauxite Supply Agreement
Form 55 Alumina Expansion Agreement
Form 56 Agreement for Exploring for and Developing Ores, Minerals and Other Products
Form 57 Agreement Relating to Evaporites
Form 58 Australia: Iron Ore Concession Agreement
Form 59 Peru: Ore Deposits Mining Concessions Agreement
Form 60 Mining Lease
Form 61 Drilling Agreement
Form 62 Joint Venture Agreement
Form 63 Management Agreement
Form 64 Iron Ore Contract
Form 65 Purchase Agreement for Nickel Project
Form 66 Public-Private Agreement for Bridge Project
