'Project Finance' (PDF-2589kb)
International Corporate Practice - A Practitioner's Guide to Global Success
Jane Wallison Stein,
Philip Jonathan Tendler, Todd Culwell, Ayaz Shaikh
Pillsbury project finance partners Ayaz Shaikh, Jane Wallison Stein, Todd Culwell and senior associate Philip J. Tendler recently authored a comprehensive chapter on structuring and financing effective projects and infrastructure developments in a reference book about handling international and cross-border transactions.
Published in International Corporate Practice (2007: Practising Law Institute, www.pli.edu, 1-800-260-4754), the 102-page chapter provides an overview of project finance, including structuring an international project, understanding and both mitigating commercial and political risks, project documentation, construction, operational and maintenance contracts, financing, environmental issues and siting, tax planning and insurance. Few deals are more complex than a project financing of an infrastructure project such as an airport, highway, oil or natural gas facility, water desalination or utility plant, because not only of the size and scope of such project but the potential impact such infrastructure or industrial facilities may have on a community or region, as well the challenges posed by financing a public-private project as many of these projects such as bridges, highways or airports are.
“One distinguishing feature of a project financing transaction is the large number of participants needed to achieve financial close and commercial operation,” writes the authors. “This is no accident: since the project is not financed on the credit of its sponsors, but rather on the revenue-generating capability of the project itself, structuring a project financing involves a painstaking process of identifying all circumstances and events that could subject the project to risk, and then making sure these risks are addressed by parties that have the capability of mitigating them or their effects. Project financing is, in part, an exercise in risk allocation…”
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