Principles of Project Finance

• Post-Financial Close

• As a budgeting tool

• As a basis for lenders to review the changing long-term prospects for the

project and thus their continuing exposure

The financial model covers the whole of the Project Company’s operations, not

just the project, and thus takes into account, for example, tax and accounting is-

sues that may affect the final cash flow of the Project Company.

Although separate and parallel financial models may be developed by the

Sponsors and the lenders, as discussed in §5.1.6 it is often more efficient for a

single model to be developed jointly. This may mean that the Sponsors develop the

model initially and then work on it jointly with the lenders, depending on the tim-

ing of the lenders’ involvement in the project. The Sponsors ...