PROJECT FINANCE

Project Finance

Our project finance lawyers have extensive experience dealing with construction contractors, power and product purchasers, operation and maintenance contractors, land owners, private equity investors, banks and investment banks, and regulatory agencies and help such domestic and international clients to develop, finance, restructure, purchase and sell energy and other infrastructure projects which created by partnerships, limited liability companies and other joint venture arrangements.

In this regard we provide more than just legal counsel. We provide business and strategic advice structuring, negotiating and documenting the full array of project and financing agreements tailored to each client’s needs. We know how to draft contracts and documents that meet the needs of financiers, and to identify and resolve issues that could potentially delay or break deals. Our clients benefit from our understanding of alternative sources of funding and our ability to work closely with their financial advisers.

Our main services for project finance clients include the following:

1. Due Diligence

Due Diligence is a comprehensive study of the operating, financial and legal activities of a company and the totality of relations within the company and its interaction with the environment where it operates. Such study can form an objective view on the company. Due Diligence is aimed at the comprehensive check of the validity and business attractiveness of a proposed transaction or investment project. In the course of Due Diligence there is penetrating understanding of financial statements of a company and extensive legal evaluation of all documents of the company.

Therefore, to attract potential investors, in addition to the above, in recent years more and more companies are willing to subject themselves to the Due Diligence. In addition, an investment seller is interested in the maximum selling price. To that effect, legal analysis may also be initiated before it will be performed by a buyer, in order to identify and correct any violations, if possible. As a result, by the start of negotiations the buyer will have more information about the company, which may lead to an increase in its value.

In general, the common categories of due diligence services we provide include the following:

• Organizational information – formation or incorporation documents; bylaws or operating agreements; agreements between owners of the equity interests; up-to-date board minutes; notices for equity owner and board meetings; ledgers and equity certificates;
• Financial records – balance sheets; income statements; annual reports, audit reports, attorneys’ letters to auditors;
• Material contracts – customer contracts, supply agreements, loan and other financing agreements, insurance policies, employment contracts and consulting agreements, marketing and advertising agreements;
• Regulatory matters and litigation – permits and orders, copies of pleadings in pending litigation, copies of threatened litigation or notices of violation of any laws;
• Employment and labor matters – information regarding employees, wages, benefit plans, bonus compensation, vacation, sick time, and any benefits and policies;
• Intellectual property – documentation supporting any copyrights, trademarks, trade names, or patents owned by the selling company or any of its key employees related to the business.

2) Risk Management

Today’s rapidly changing business environment requires thinking about risks in new ways. Taking an innovative approach to managing and enhancing your governance, risk and compliance activities can help you seize opportunities, stay a step ahead of uncertainly, and meet shareholders expectations.

Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive.

Risk Management involves identifying the type of risk exposure of the company, measuring those potential risks, insure or mitigate some of the risks and estimation the impact of various risks on the future earning of the company.

Risk Management services we provide include:

• Eliminating a specific commercial and business threat, usually by eliminating the cause;
• Reducing the expected monetary value of a risk event by reducing the probability of occurrence;
• Accepting the consequences of the risk. This is often accomplished by developing a contingency plan to execute should the risk event occur;
• Monitor risk management policies and procedures to ensure that program and organizational risks are minimized;
• Advise the organization’s leadership on appropriate insurance coverage for the organization and the Board of Directors.

3) Acquisition Financing

Acquisition Financing is the capital that is obtained for the purpose of buying another business. Acquisition Financing allows the user to meet their current acquisition aspirations by providing immediate resources that can be applied towards the transaction. There are several different choices for a company that is looking for Acquisition Financing. We provide the services in two main categories, as mentioned herein below:

• Line of credit, abbreviated as LOC, is an arrangement between financial institutions -usually a bank – and a customer that establishes a maximum loan balance that the lender permits the borrower to access or maintain. The borrower can access funds from the line of credit at any time, as long as he does not exceed the maximum amount set in the agreement and as long as he meets any other requirements set by the financial institution, such as making timely minimum payments. The main advantage of a line of credit is its built-in flexibility. Borrowers can request a certain amount, but they do not have to use it all. Rather, borrowers can tailor what they spend to their needs, and they only have to pay interest on the amount they spend, not on the entire credit line. In addition, consumers can also adjust their repayment amounts as needed, based on their budget or cash flow. For example, borrowers can repay the entire outstanding balance at once, or they can opt to just make the minimum monthly payments.

• Economies of scale are the cost advantage that arises with increased output of a product.Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies. Economies of scale can be classified into two main types: Internal – arising from within the company; and External – arising from extraneous factors such as industry size.

4) Support of Project Audit

The project audit is the process of verification of the extent to which the project realization complied with the rules and principles of project management for the concrete project and in practice project audit is a key step in the process of closing a project .The purpose of a project audit is to improve the performance of a project or to improve the performance of future projects by undertaking a forensic review to uncover problems to be avoided. In this way, project audits are highly beneficial to the organization. In this regard support of project audit evaluates the total project processes and outcomes, to identify strengths and weaknesses of client’s projects and helps the client evaluate project results in six major areas of project management effectiveness:

•  Project Startup;
•  Initiation or High-Level Plan;
• Detailed (Phase) Plan;
• Requirements Definition;
•  Project Tracking and Control;
• Closure and Post-Project Evaluation.