Principles of Project Finance

If irregular cash flows are projected, the loan repayments can also be structured

on an irregular schedule such that the same level of ADSCRs are maintained

throughout the loan term (this is known as a “sculptured” repayment schedule). This

may be necessary, for example, if after-tax cash flows in later years decrease be-

cause deferred taxes start becoming payable if the Project Company has benefited

from accelerated tax depreciation on its assets in the early years of operation.

These considerations are not only relevant to the investors: the debt repayment

structure clearly affects the cost of the Project Company’s products or services and

may be a crucial factor if Sponsors are in a competitive bidding situation for a pro-

spective project.

§13.1.4 ...