Project Financing (Hardcover)

~ John D. Finnerty Ph.D. (Author) "Several studies have explored the rationale for project financing..." (more)
Key Phrases: steam purchase agreement, service project debt, buffer subsidiary, Euro Disneyland, Eurotunnel System, United States (more...)

Editorial Reviews

Product Description

Project financing is an innovative and timely financing technique that has been used on many high-profile corporate projects, including Euro Disneyland and the Eurotunnel. Employing a carefully engineered financing mix, it has long been used to fund large-scale natural resource projects, from pipelines and refineries to electric-generating facilities and hydroelectric projects. Increasingly, project financing is emerging as the preferred alternative to conventional methods of financing infrastructure and other large-scale projects worldwide.

The intricacies of project financing are formidable, and can easily be misunderstood and, consequently, misused. While project financing structures share certain common features, by necessity, they require tailoring the package to the particular circumstances of the project. That is where both the benefits and the challenges lie.

As an investment banker currently with Houlihan Lokey Howard & Zukin, John D. Finnerty has a wealth of experience in project financing. Now, he brings his considerable expertise to a comprehensive exploration of the facts, figures—and potential faux pas—surrounding Project Financing.

What distinguishes project financing from conventional direct financing is that rather than looking to the firm's entire asset portfolio to generate cash flow, in project financing, the project is "a distinct legal entity" and the financing is tailored to the cash flow characteristics of the project assets. Such a structure can yield a more efficient allocation of risks and returns than conventional financing, but careful financial engineering is critical.

With actual examples and case studies, Project Financing takes you through the process step by step. It covers the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, and raise the funds. Along with cogent analyses of why some project financing plans have succeeded while others have failed, you'll find detailed information on:

• Designing contractual arrangements to support project financing
• Issues for the host government—legislative provisions, public/private infrastructure partnerships, public/private financing structures
• Credit requirements of lenders, and how to determine the project's borrowing capacity
• How to prepare cash flow projections and use them to measure expected rates of return
• Tax and accounting considerations
• Detailed case studies—including Euro Disneyland and the Eurotunnel Project—that illustrate how to apply the analytical techniques described in the book

From funding sources and contract options to security arrangements and legal requirements, Project Financing provides the most complete coverage available today.

Project financing is one of the hottest topics in corporate finance. As an effective alternative to conventional direct financing, it is being used more frequently—and more successfully—on a wide variety of projects. In this comprehensive new book, John D. Finnerty, Editor of Financial Management, takes an in-depth look at this important financing technique.

Praise for PROJECT FINANCING

"Owing to his teaching as a finance professor and as an experienced investment banker, John Finnerty brings to his book, Project Financing, an insightful perspective, blending the theoretical with the practical."—Zoltan Merszei, Former Chairman, President, and CEO, The Dow Chemical Company

"Finnerty has managed to distill the complexities of project financing with its myriad components and variations. Clear, practical, and in-depth, Project Financing is a valuable user's guide for project sponsors, regulators, host governments (local and foreign), and financiers alike."—Ricardo M. Campoy, Managing Director, ING Capital Corporation

"Project Financing warrants a place in the essential libraries of corporate financial managers, their advisors, senior strategists, bankers, large private investors, government officials, and anyone who aspires to master innovation in corporate finance."—Robert F. Bruner, Professor of Business Administration, Darden Graduate School of Business Administration, University of Virginia

"This book is the first comprehensive treatment of project financing. It provides an invaluable contribution to financial management literature and practice."—Andrew H. Cohen, Distinguished Professor of Finance, Southern Methodist University

From the Publisher

This timely book describes an innovative financing technique, using examples and case studies such as Euro Disneyland and the Eurotunnel to walk readers through its essential steps and procedures. Analyzes the shortcomings of unsuccessful project financing attempts. Comprehensive coverage includes the rationale for project financing, security arrangements, legal structure and contract options, preparing the financial plan, estimating the borrowing capacity on a project, sources of funds, and much more. The appendix features selected examples of project financing.

See all Editorial Reviews

Product Details

• Hardcover: 384 pages
• Publisher: Wiley; 1st edition (January 15, 1996)
• Language: English
• ISBN-10: 0471146315
• ISBN-13: 978-0471146315
• Product Dimensions: 9 x 6.2 x 1.3 inches
• Shipping Weight: 1.6 pounds
• Average Customer Review: 4.2 out of 5 stars  See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #977,187 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

0 of 1 people found the following review helpful:

5.0 out of 5 stars Good book!, April 25, 2009

By	P. Kundurthy (Seattle, WA USA) - See all my reviews (REAL NAME)

This review is from: Project Financing: Asset-Based Financial Engineering (Wiley Finance) (Hardcover)

This book is great to develop a good understanding of Principles of project finance. The treatment is practical and reiterates the concepts through case studies.

0 of 1 people found the following review helpful:

4.0 out of 5 stars Good Text, December 10, 2008

By	Reader (Arlington, Virginia) - See all my reviews

This review is from: Project Financing: Asset-Based Financial Engineering (Wiley Finance) (Hardcover)

If you're forced to read a project finance text for a college course or for any other reason, then this one is pretty good. The writing is crisp and clear, the case studies are genuinely helpful, the length is manageable, and the reader isn't overwhelmed with tiny print, mindnumbing details, or esoteric math. But let's face it, it IS still a finance text...hence my four-star rating.

4 of 9 people found the following review helpful:

4.0 out of 5 stars Calculation error in Chapter 7 ?, June 17, 2006

By	Mark Twain "Profin" (Seattle) - See all my reviews

Is there a calculation error in Chapter 7? The example is for calculating ATCF of Rocky Mountain project. The initial equipment investment of $55M is capitalized with $5M residual value. $5M of the $6M startup cost is also capitalized. However, the depreciation taken over the next 10 years is only $5M [$55M - $5)/10]. The capitalized $5M startup cost seems to be forgotten. Anyone else noticed this?