Introduction
This practice note sets out a number of fundamental legal and business considerations and issues to address in the context of a project finance transaction.
Project Finance Generally
Industrial projects, such as power plants, toll roads, ports and oil and gas pipelines, are all typically financed through a complex legal, financial and regulatory structure involving multiple project parties, sophisticated documentation and extensive negotiation.
Project finance transactions are typically either (i) limited recourse, where lenders do not assume the entire financial risk of the project and instead rely on mechanisms such as completion guarantees or parent guarantees, or (ii) non-recourse, where the revenues generated from the project and the project’s assets repay the indebtedness owed to the lenders. In addition to providing funds to complete new projects, the scope of project finance also allows project companies to expand existing projects or refinance existing indebtedness on existing projects at more favorable terms.
Nature of the Transaction
One of the key issues to address at the outset of a project finance transaction is a determination as to whether the project is within a regulated industry. If it is, the project sponsor will need to engage specialized regulatory counsel to address issues related to obtaining permits, managing industry-specific risk and other particular requirements and conditions precedent that will lead to deal completion.
If the
The United States government is the largest single purchaser of goods and services in the world. Even during times of economic hardship, the US continues to dump billions into the private sector. The federal procurement spending rate of growth has surpassed the rate of U.S. inflation every year, since 2000. With annual federal procurement budgets of more than $400 billion, it is no surprise that the competition for government contracts has increased tremendously. Consequently, more and more companies are trying to get a piece of the action. When these companies adhere to all of the required regulations and statutes, they expect their proposals to be evaluated and the contract awarded in
This paper includes a description of the procurement planning process. The most valuable output of the plan procurement process will be identified. Furthermore, the various contract types will be explained. A source criterion that would be applicable to any project will be described and three criteria that would apply to most projects will be identified. An analysis of the ethical
Question 4: What is the cost of not taking on the right projects and on mergers and acquisitions due to a decision making process based only on a legal standpoint?
With any major investment, it is important to consider the monetary and non-monetary aspects including gaining an understanding of the culture, the ideal management approach, past and future trends, along with political roadblocks.
The assignment will provide detailed information using case laws and a report around the main elements of a contract. These case laws will include:
In the paragraphs that follow I will address the issues such as evaluation of the contracts and decide if they will be governed under the common law rules or the Uniform Commercial Codes (UCC). The paper will also analyze the essential elements of an
The question that transcends the project is whether equity investors be sufficiently rewarded to justify there financing interests. The answer to this question is dependent
The following section will show the ratios and percentages figured by using these two companies’ financial statements. A comparison will be used to compare the companies to one another. People will always needs cars to get around whether it’s for education, work or tourism. By comparing these companies we will know which company maybe the best to invest and to determine which companies will survive in the future. Take a look at Table 1 below as it provides a full listing of
Project finance is a kind of Financing that has a priority does not depend on the creditworthiness of the sponsors proposing the business idea to launch the project. Approval does not even depend on the value of assets sponsors are willing to make available as collateral. Instead, it is basically a function of the project’s ability to repay the debt contracted and remunerate capital invested at a rate consistent with the degree of
The use of an accounting rate of return also underscores a project 's true future profitability because returns are calculated from accounting statements that list items at book or historical values and are, thus, backward-looking. According to the ARR, cash flows are positive due to the way the return has been tabulated with regard to returns on funds employed. The Payback Period technique also reflects that the project is positive and that initial expenses will be retrieved in approximately 7 years. However, the Payback method treats all cash flows as if they are received in the same period, i.e. cash flows in period 2 are treated the same as cash flows received in period 8. Clearly, it ignores the time value of money and is not the best method employed. Conversely, the IRR and NPV methods reflect that The Super Project is unattractive. IRR calculated is less then the 10% cost of capital (tax tabulated was 48%). NPV calculations were also negative. We accept the NPV method as the optimal capital budgeting technique and use its outcome to provide the overall evidence for our final decision on The Super Project. In this case IRR provided the same rejection result; therefore, it too proved its usefulness. Despite that, IRR is not the most favorable method because it can provide false results in the case where multiple negative
1. Introduction 2. Analysis of current position 3. Analysis of new project 3.1 Methodologies and processes of Valuation 3.2 processes of Valuation 4. Conclusion
However, there are specific terms and conditions need to be addressed in the context of the project management in this case.
Project finance is best understood in terms of a risk allocation which reconciles the potentially conflicting objectives of borrowers and lenders by utilizing the long-term economic and commercial linkages between the sponsors, lenders and third party participants involved with a project. (Howcroft &Fadhley, 1998).
For this assignment the writer is going to discuss the nature and types of construction contracts and will explain the legal responsibilities of the various parties involved in the design and the construction process.
The following paper analyzes a project from financial perspectives using the capital budgeting techniques like Net Present Value (NPV) and Internal Rate of Return (IRR).