Funding Activities for Transport in the Evaluate stage

Objective

Evaluate the availability of project funding through engagement with the identified potential funding providers.  This should set out the heads of terms / key principles that will apply to the provision of such funding, its drawdown and terms for repayment for the transport element of the project.

Major Deliverables

• Finalise the funding strategy for the transport element of the project.
• Debt information memorandum to provide to potential lenders including information on the project including project information, cash flow support for lenders, security arrangements and risk mitigation
• Equity information memorandum to provide to potential equity providers (if required)
• Indicative letters of support/terms sheets from potential funding providers
• A final funding plan for the transport element defined to the point where it sets out:
• An evaluation of the high level principles and conditions for the provision of funds from various sources
• The process for getting to financial close
• The process for closing any funding gap
• Provide relating funding issues for the transport element to the overall project business plan, financial analysis and commercial negotiation strategy.

Tasks

Specific tasks include the following:

• In conjunction with the commercial team confirm the project ownership structure for the transport element of the project.  This should set out the conditions and timing for equity involvement, loans (convertible or other), contribution in kind (‘sweat equity’) etc
• Detailed project financial model developed for the preferred project configuration and supporting the key financial analysis contained in the debt information memorandum such as key debt sizing criteria (project IRR, equity IRR, debt service coverage ratio, project life coverage ratio)
• Using the initial funding plan and stakeholder engagement plan, develop and implement a program of preliminary negotiations with potential funding parties to develop the heads of terms / principles for provision of the funds and evaluation of the availability of funds for the transport element of the project
• Detail the funding options – including committed funds – setting out at least the following information:
• Amount of funding
• Source of funding
• Funding entity and its financial capacity
• Type of funding (Debt / Loan / Working Capital / Equity / Bonds / )
• Funding interest rate
• Draw down profile
• Key dates in provision of funds
• Repayment profile
• Repayment conditions / covenants
• Security requirements
• Performance obligations
• Termination provisions
• Following discussions with potential funding providers, evaluate and quantify the risks associated with the funding sources and the extent to which any risk sharing is associated with the funding.  If so, detail which risks are involved and how the risk sharing helps to provide value for money for the transport element of the project
• Evaluate the funding ‘gap’ that exists and set out the plan for how this will be addressed within the timescales for the project including the activities to identify other funding sources that could be approached to close the funding ‘gap’
• Finalise the funding strategy and funding plan for the transport element of the project taking into account the feedback from the stakeholder engagement and preferred option funding requirement

Examples

Key Personnel

• Project Manager
• Commercial work-stream lead
• Finance work-stream lead