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John Richter Instructor Cash Flow Waterfall The heart of all project finance models T201 Project Finance Modelling.

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Presentation on theme: "John Richter Instructor Cash Flow Waterfall The heart of all project finance models T201 Project Finance Modelling."— Presentation transcript:

1 John Richter Instructor Cash Flow Waterfall The heart of all project finance models T201 Project Finance Modelling

2 The financial modeling specialists Financial Mechanics Cash Flow Waterfall  Prioritizes cash receipts / payments during operating period Best not to intertwine with pre-conversion cash flows  Priority ranking unique to each transaction e.g. Is capital expenditure paid 'ahead' of / above debt service (or below)  Not a statutory or presentational cash flow Nor is it set-up to replace sources and uses of cash statement  Calculates cash flows at key intermediate points Cash flow available for debt (service), CFADS Cash flow available for shareholders / distributions F1F9 Modelling: 2

3 The financial modeling specialists Financial Mechanics 3 Basic priority of payments Water flow analogy DSRA Revenues Other income Operating costs Taxes Debt service (Lenders) Distributions (Shareholders) Capital expenditure

4 The financial modeling specialists Financial Mechanics 4 The heart of the model Where all agreements and analysis come together EBITDA Equity distributions Tax payments [Capital expenditure] Debt service DSRA Technical assumptions Product pricing Operations plan Indexation / forex Corporate structure Jurisdiction's tax rules Financing structure Project costs; leverage Debt term; Interest rate Ratio sculpting CFADS Equity structuring Tax optimization Accounting rules Ratio lock-ups Debt service cover ratios Returns / valuation EPC contract Revenue contracts (and/or market studies) O&M, fuel supply, O&M, insurance Cash Flow Principal AgreementsModeling Assumptions Tax rules / legislation Incorporation / partnership agreements Facility agreements Inter-creditor agreement

5 The financial modeling specialists Financial Mechanics Contact 5 John Richter Instructor Financial Mechanics


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