Project Financing: Asset-Based Financial Engineering (3rd Edition)

Project Financing: Asset-Based Financial Engineering (3rd Edition)

John D. Finnerty

Language: English

Pages: 773

ISBN: 1118394100

Format: PDF / Kindle (mobi) / ePub


A timely update to one of the most well-received books on project financing
As an effective alternative to conventional direct financing, project financing has become one of the hottest topics in corporate finance. It's being used more and more frequently—and more successfully—on a wide variety of high-profile corporate projects, and has long been used to fund large-scale natural resource projects. But the challenges of successful project financing are immense, and the requirements of the process can easily be misunderstood. That's why John Finnerty has returned with the Third Edition of Project Financing.

Drawing on his vast experience in the field, Finnerty takes you through the process step by step. Using updated examples and case studies that illustrate how to apply the analytical techniques described in the book, he covers the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, raise the funds, and much more.

- Includes completely new chapters that cover the financing of sustainable projects as well as Sharia-compliant (Islamic) project financing

- New material has been added to the discussion of financial modeling and international debt financing

- Explores today's most innovative financing techniques and analyzes the shortcomings of unsuccessful project financing attempts

Whether you're a corporate finance professional, project planner, or private investor, Project Financing, Third Edition demystifies the complexities of project financing and provides an invaluable guide for anyone who wants to master innovation in corporate finance today.

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mitigate a variety of risks. Two of these risks, currency risk and political risk, are peculiar to cross-border projects. Currency Risk There are at least three important aspects to currency risk: (1) the risk that the local currency will depreciate in value—for example, as the result of the host government's formally devaluing it; (2) the risk that the revenue and cost streams are currency-mismatched—for example, when the revenues are generated in a weak currency while the debt is denominated

book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall

financial situation. Finally, in September 1995, Eurotunnel unilaterally suspended interest payments on more than �8 billion in bank loans.15 It then announced that it hoped to negotiate, by summer 1996, a debt-restructuring agreement that would satisfy both its 225 creditor banks and its 760,000 shareholders.16 A substantial restructuring was achieved in 1998. Eurotunnel has struggled to manage its excessively high leverage for nearly two decades. In May 2006, Eurotunnel reached a preliminary

yield premium to compensate for this risk. This premium is generally between 50 and 100 basis points, depending on the type of purchase contract negotiated. The hell-or-high-water contract, described in Chapter 7, provides the greatest degree of credit support and therefore requires a yield premium that is at the low end of this range. Higher Transaction Costs Because of their greater complexity, project financings involve higher transaction costs than comparable conventional financings. These

Brewing Company. Bev-Pak enjoyed a competitive advantage: Its state-of-the-art automation enabled it to sell its tin-plated steel cans at a lower price than aluminum cans.6 Moreover, to reduce its economic risk, Bev-Pak retained the flexibility to switch to aluminum can production if the price of aluminum cans were to drop. Financing a large, highly automated plant involves uncertainty about whether the plant will be able to operate at full capacity. Independent ownership enables the plant to

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