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Macquarie University APPLIED FINANCE CENTRE ECFS 877 : PROJECT FINANCE ELECTIVE
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Aim: This course examines the business rationale for Project Finance. A risk system is introduced for the identification and allocation of risk in the various approaches to structuring a project financing. The useful cashflow measures are defined and used in a classroom simulation to judge the project finance size and repayment method. Funding, political risk structuring, and recent capital market developments are highlighted in class and through practical case studies. A heavy emphasis is placed on the international character of the Project Finance industry.
All examinations are open book and students are expected to bring their course binder and notes. A financial calculator will help during the course. Otherwise access to a computer with Excel spreadsheet software is assumed. For the case studies (see below), a sample/starter computer cashflow is provided which is sufficient to complete the assignment. Extensive reference material in the notes will be expected to be read in advance and will be the subject of in-class assignments and class quizzes. The Final Examination will be in three parts: Multiple choice (25%); Cashflow Exercise (25%); and Cases/Essays (50%). An exam booklet will be provided. A laptop computer would more likely be a distraction than a help. The time allowed is two hours plus 15 minutes reading. (See FAQ-Frequently Asked Questions) Upon sign in at the course, students are required to nominate a project financing referenced in the recent business press. (It would be a good idea to track such a project before coming to the course.) If you cannot find any such reference, please contact the lecturer before starting the course. One page should be sufficient and is to be handed in at the Final Exam; please mark on to the page your name, course, and the date (of the Final Exam). You will need to cite the following:
Please be sure it is a Project Financing and not a corporate/government borrowing. If you can submit a deal diagram too, that will earn bonus points. (Note: This is in addition to the two choices for the Case Study Assignment – see below.) References The course notes contain all the requisite reading material for the classes, class assignments, final examination, and case studies, as well as the lecturer’s slides, background articles, and reference material/glossary. Floppy disks will be handed out at the first class with the case study models. Further background may be found in the following books: Tinsley, Advanced Project Finance, 1st Edition, Euromoney Books, 2000. Tinsley, Practical Introduction to Project Finance, DCGardner/Euromoney Workbook, London, 2nd Edition, 2000. To download the full file on the 16 Risks, please note it is 71kB. www.iaf.biz This website has additional material which may be of use, especially for Risk Identification and Structuring. Note also the deal of the moment and other dealsheets. Navigate to the Project Finance part of the site. Project Finance Session Outlines Session 1 Topics: Project Finance – Sectors, Scope, and Scale The Project Finance Decision Stages/Process/Timing
Session 2 Topics: Risk Analysis and Structuring
BOO/BOT Transactions Cases: Evelyn’s Mine Assignments: Asia Telecoms: Risk Assignments Allocated to Each Team Session 3 Topics: Cashflow Characteristics
Class Assignment: Cashflow Case (Printouts provided) Cases: Lomond Power Aussie Steel Session 4 Topics: Sources of Funds
Documentation Quiz: Euromoney Project Finance Article Session 5 Topics: Political Risk | Definitions | Structures | Cofinancings | Insurance
Case: Sri Lanka Spaceport Session 6 Topics: Capital Markets
Case Study: China Power Risk/Structuring Workshop: Asia Telecoms (Team Risk Assignments) Students can select one of these cases for their case study assignment. The actual case work is to be submitted at the Final Exam (along with the Project Identification Deal Sheet). The case choices are: | Evelyn’s Mine | Lomond Power | Aussie Steel | Sri Lanka Spaceport | China Power | Asia Telecom
Each student will nominate a first and second case choice (from the above list) to the lecturer on sign in for the course or else will be assigned a case from the above list. Full detail of what is required for each assignment is contained in the pages headed ‘Case Study Assignment’ just before Session 1. A student can submit a 3½" floppy disk with the case study PRINTED OUT provided the text is in Microsoft Word, graphics in PowerPoint, and the (improved) model capable of running under Lotus Ver.4 or Excel in Win95. This floppy disk alternative is not obligatory. A printout is mandatory. If a case study is not submitted on time, zero credit will apply to that 25% part of the course assessment. Elements of each case are addressed during the course which will be useful in the case study assignment. Website tip: Keep the Case Study to PowerPoint (bullet points) and the Answers to a separate Word document. Don't try to answer the questions in the Roadshow/PowerPoint-bullet points. Remember you, as a Project Financier, are trying to 'sell' the deal as it is/was at that time (of syndication). Course Instructor Richard Tinsley International Advisory & Finance 25 Rothwell Drive Ottawa, Ontario K1J 7G5 Canada Tel: +1-613-744-7170 Fax: +1-613-744-7270 email: project finance AT iaf.biz (you're here already!)FAQ - Frequently Asked Questions In the Final Exam, will I be asked questions about my Case Study Assignment? No, the Final Exam will not ask any questions about the six possible case Study Assignments. However, review of the other five cases (and the class work on those cases) will serve as a reminder for some points raised in the Final Exam. Is the Deal sheet/Identification just one page? Yes, although a diagram and fuller description will earn bonus marks. For clarity, do not address Case Study Assignment/Roadshow style questions in the Deal-Sheet/Identification. Do I need a calculator? Yes, a financial calculator should be with you at the course at all times. But you don't require a laptop at the course sessions. Will I be asked about the Asiaspec spreadsheet/syndication in the Final Exam?No, that's included on the course disk as a courtesy and to show the cell logic/calculations (rather than eating up in-class time) EnrolmentFor enrolment details, brochures, and course dates, please contact: Kathleen Parnell or the Director, Dr. Phil Dolan Applied Finance Centre Macquarie University GPO Box 3480 Sydney, NSW Australia 1043 Tel: +61-2-9223-6231 Fax: +61-2-9223-6237 Email: Kathleen.Parnell@mafc.mq.edu.au Web: www.mafc.edu.au |
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