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Financing Strategies. Mark Dagel President and Co-Chairman Link Global Holdings, LLC. Alternate Capital Source: Project Finance. Many companies are looking for secure financing options that can maximize returns & not tie-up liquidity.

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financing strategies

Financing Strategies

Mark Dagel

President and Co-Chairman

Link Global Holdings, LLC

alternate capital source project finance
Alternate Capital Source: Project Finance
  • Many companies are looking for secure financing options that can maximize returns & not tie-up liquidity.
  • Project Finance can provide an alternate capital source for both public and private companies looking for construction financing.
    • Debt provided for project development solely based on the project’s perceived risks & expected cash flows
    • Debt providers have either no recourse or limited recourse to the parent company that develops or “sponsors” a project
bonds and project finance
Bonds And Project Finance
  • Along with equity, traditional sources of capital for project finance include bank loans & personal investment.
  • Market problems have led developers to seek new sources of capital for project finance.
  • Bonds can either be a sole source of debt, or a complement to bank debt and offer structured advantages such as longer tenor, lower interest rate, and flexible amortization schedules that improve equity returns.
bond credit enhancement mechanisms
Bond Credit Enhancement Mechanisms
  • Currently, many projects reviewed by the rating agencies find themselves well below the investment grade threshold due to factors such as technology risk, scale-up risk, or feedstock risk.
  • There are several credit enhancement mechanisms that can be employed to help mitigate these risks and allow the bonds to be priced at a more reasonable interest rate level.
  • Third Party Insurance
    • Highly tailored technology warranties that are able to support a bond funded project financing. These third party insurers have both the technical expertise & balance sheet savvy to offer investment grade offerings. consider investment grade have begun offerings.
  • State and Local Governments Credit Enhancement
    • Government support can range from accelerated permitting to financial backing in the form of guaranteeing the debt through a “Moral Obligation”
bond credit enhancement mechanisms cont d
Bond Credit Enhancement Mechanisms(cont’d)
  • Export Finance Agency Loan Guarantees
    • Most OECD member countries have an export finance agency whose goal is to support the export sales of goods and services from their country
    • The majority have project finance programs that can guarantee loans. Many have a policy of supporting alterative energy and sustainability
    • The amount of the loan guarantee from an export finance agency is based on percentage of domestic content (either goods or services) to be exported to a foreign buyer
    • A loan guarantee becomes a 100% unconditional repayment obligation of the export finance agency whose credit rating is equivalent to its national governments credit rating
    • Export finance agency financing require goods and services to move across borders