主题：【原创】项目融资的通俗解释 -- 麦兰

Most project that use project finance is highly leveraged transactions, with debt making up more than 60% of the total financing. Most project involve subjects traditionally funded by governments. The simple scale of the investment often precludes private investors from being able to fund it.

Separability of the project from its investors. The project is established as an individual legal entity, separate from the legal and financial responsibilities of it individual investors. This not only protects the assets of equity investor; it also provide a controlled platform upon which creditors can evaluate the risks associated with the singular project.

Long-lived and capital intensive singular project. Not only must the individual project be separable and large in proportion to the financial resources of its owners, its business line must be singular in its construction, operation and size (capacity). The size is set at inception and is seldom, if ever, changed over the projects life.

Cash flow predictability form third-party commitments. An oil field or electric power plant produces a homogenous commodity product that can yield predictable cash flows if third-party commitments to take or pay can be established. Non-financial costs of production need to be controlled over time, usually through long-term supplier contracts with price adjustments clauses based on inflation. The predictability of net cash inflows to long-term contracts eliminates much of the individual projects business risk, allowing the financial structure to be heavily debt-financed and still safe from financial distress.

Finite projects with finite lives. Even with a longer-term investment, it is critical that the project have a definite ending point. Because the project is standalone investment whose cash flows go directly to the servicing of its capital structure, and not to reinvestment for growth or other investment alternative, investors of all kinds need assurances that the projects returns will be attained in a finite period. There is no capital appreciation only cash flow.

The project is usually established as a distinct, separate entity.

It relies considerably on debt financing. Borrowing generally provides 70-75 percent of the total capital with the balance being equity contributions or subordinated loan from the sponsors. Some projects have been structured successfully with over 90 percent debt.

The project loans are linked directly to the venture’s assets and potential cash flow.

The sponsors’ guarantees to lenders do not, as a rule, cover all the risk and usually apply only until completion (coming on-stream)

Firm commitments by various third parties, such as suppliers, purchasers of the project’s output, government authorities and the project sponsors are obtained and these create significant components of support for the project credit.

The debt of the project entity is often completely separate (at least for balance sheet purposes) from the sponsor companies’ direct obligations.

The lender’s security usually consists only of the project’s assets, aside from project cash generation.

The finance is usually for a longer period than normal bank lending.

The project is often with limit recourse.

The term project finance covers a variety of financing structure. Generally and legally, project finance refers to funds provided to funds provide to finance a project that will, in varying degrees, be serviced out of the revenues derived from that project. The level of recourse and the type of support given may vary from one project to another. In project finance, lenders usually take some degree of credit risk on project itself.

There are two main types of risk which business can be exposed to:

1, business or operational risk-encompasses many elements that render future operational cash flows uncertain

a. production risk-machine failure or production defects

b. input risk-running out of stock, loss of key staff

c. market risk-changing demand, increased competition

d. regulatory risk-extra regulation implies extra costs

e. strategic risk-poor decision making, new areas of business (takeover)

f. reputation risk-risk of production failure

g. event risk-earthquake

h. Political risk (also refer to as country risk)-restrictions placed on overseas operations by foreign government, such as barriers to repatriation of profits and the expropriation of assets.

2, financial risk-the threat to the cost of financial and even to viable operation of a company stemming from the way it is financed

a. risk of insolvency-the more highly geared the greater this risk

b. higher agency costs as investors monitor the actions of managers

c. an increase in the cost of finance resulting from a general increase in interest rates, or an increase in the risk of the company

d. a change in tax regime

e. a change in macro-economic variables, such as interest rate or exchange rates.

All these factors make the prediction of future cash flow difficult, and often the problem is compound by the interaction of business and financial risks.

Resource risk concerns the ability of the project’s recoverable resources to repay the lenders and to provide the sponsors with an adequate return on their investment.

Raw materials and supplies risk where raw materials are processed, there is a risk that the plant, though constructed and operationally complete, is unable to fulfill production contracts owing to a shortage of inputs.

Completion risk if the project can not finished within estimated cost and time limits and meet s design specifications of quality and quantity, or can not work and produce. It can not produce cash flow to feed back the lenders. It is a big problem.

Operating risk operating risk is concerned with whether the project produces in a cost-effective manner. Lenders seldom advance funds for a project on a new or unproven technology.

Marketing risk is that the output can not be sold for the price or in the volume originally planned.

Financial risks, including foreign exchange risk

Political and regulatory risk invest in foreign countries is subject to variety of risk such as expropriation or nationalization. There may be changes in local tax regime, currency and foreign exchange problems.

Force majeure risk the risk out of control such as typhoon, tide wave, or war, hacker attack.

In deciding whether to finance a project, lenders must consider its technical feasibility and its economic projections. This means that the commercial, legal, political and technical risk of a project must all be evaluated. Having analyzed the risk associated with a project, lenders try to establish a method of financial structure in project finance should be creative enough to allow the project to succeed. From the lender’s point of view, effective security must be structured. Lenders are guarantees and performance bonds project financier are very concerned about the availability of all raw materials and customers regarding the revenues which the project will generate. Evidence of sales contracts may be asked for with respect to the short to medium term or even the longer term. Provisions relating to price adjustments may be critical.