Project finance is the financing of long-term infrastructure and industrial projects such as roads, industrial plants, power generation/distribution facilities, select real estate projects and government facilities such as airports, rail centers and hospitals. Such projects are normally based upon a complex financial structure where project debt and equity are used to gain funding for the project, rather than the balance sheets of project sponsors. Centre's professionals have extensive experience assembling and coordinating the many players involved.
Structuring the Project
Usually, a project financing structure involves a number of institutional equity investors, known as sponsors, as well as a syndicate of banks/loan funds and institutional lenders that provide loans to the operation. The loans are most commonly non-recourse loans, which are long term in nature, secured by the project assets and paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project sponsors, a credit decision in part supported by extensive financial modeling. The financing is typically secured by all of the project's assets, including the revenue-producing contracts such as those between a utility and an energy provider.
Generally, a special purpose entity is created for a project, thereby shielding other assets owned by a project sponsor from the detrimental effects of a project failure. As a special purpose entity, the project company has no assets other than the project. Capital contribution commitments by the owners of the project company are often necessary to ensure that the project is financially sound. Project finance is usually more complicated than alternative financing methods. Risk identification and allocation is a key component of project finance. A project may be subject to a number of technical, environmental, economic and political risks.
What Centre Brings to the Project
- Participating in the structuring of the project by making recommendations about financial market perspectives
- Advising in the development of financing strategies
- Advising on assembly of the consortium to maximize likelihood of bid acceptance
- Initiating discussions with potential counterparties
- Advising in the preparation of descriptive memoranda
- Identifying potential sponsors, syndicates and other financing sources
- Assisting in negotiating transactions
- Coordinating tax, legal, accounting and other closing-related activities
Clients in Asia, Europe, South America and North America have worked with Centre's investment bankers on a wide range of projects requiring efficient and effective financing.
Centre Capital Advisors, LLC • Member FINRA SIPC • 10 Elskip Lane • Greenwich, CT 06831 • USA • 800.249.0365 • info@centreadvisors.com
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