ผู้จัดการอาวุโส ส่วนอุตสาหกรรม 3.2...
TRANSCRIPT
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เอกสารประกอบการบรรยาย “ติดปีก” นักลงทนุไทยยุค 4.0
คุณณวรา ไชยเชาวน ์ผู้จัดการอาวุโส ส่วนอุตสาหกรรม 3.2 ฝ่ายกลุ่มอุตสาหกรรม 3
ธนาคารเพื่อการส่งออกและน าเข้าแห่งประเทศไทย วันที่ 3 พฤศจิกายน 2561
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Financing for oversea investment
Finance Matching
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Topics
Overview
Risk and risk mitigation
Financial structure: project finance & corporate
finance
EXIM’s product: finance & insurance
EXIM’s experience
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Steps of Risk Evaluation
Collection of data and information
Due Diligence
• Assessment of Project : Identification and evaluation of risk
• Analysis of Cash-flow
Negotiation & Discussion on Risk Sharing, Mitigation
• The person who is the best to control the risk, should take the risk
• What kind of support is required
Overview
Financial Structure
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LoanEquity
Basic structure of a Project
Project
Sponsors Lenders
Off-taker
Off-take agreement
Operator
O&M contract
EPC contractor
EPC contract
Host Government
License, Concession etc.
Feedstock supplier
Feedstock supply agreement
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Assessment of Project : Identification and evaluation of risk
Risks can be divided into following 3 main categories
Commercial Risk
• Sponsor Risk
• Completion Risk
• Operation Risk
• Fuel/Feedstock Risk
• Market/Price fluctuation Risk
• Environmental Risk
Economic Risk
• Inflation Risk
• Interest Rate Risk
• Exchange Rate Risk
Political Risk
• Political Violence and Expropriation
• Restriction on Currency Convertibility and Transfer
• Change in Law
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Sponsor Risk
– Long term strategy of Sponsor’s company.
– Sponsor’s firm commitment to carry out the
project.
– Credit standing of Sponsor (Sponsor’s
ability to provide financial support).
– Experience and Capability of Sponsor.
Key of success or failure of the project
Check Points
Consequence
– If the Sponsor does not have the ability to
carry out the project and if no company is
taking leading role, the project may be
unsuccessful.
Mitigation
– Limitation of Sponsor’s share
transfer
(Sponsor should not transfer
their share and leave the
project since Lenders are
expecting Sponsor’s leadership
in the project.)
– Joint and several responsibility
of Sponsors.
Commercial Risk
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– Credit of Contractor.
– Terms & Conditions of EPC Contract
– Track record of EPC Contractor.
– Financially stable EPC Contractor.
– Technology.
Check Points
Consequence
– Missing the business opportunity and/or
reduction of revenue and/or abandonment
of project.
Mitigation
– Have Lump Sum, Date Certain,
Full Turnkey Contract
– Use technology which has
track record.
– Sufficient contingency in the
budget.
– Sponsor completion guarantee.
Completion Risk – Will the Construction of the plant complete on schedule
and within budget?
– Cost overrun.
– Delay in operation.
Commercial Risk
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Operation Risk
– Reliability (track record) of operator.
– Credit standing of operator.
– Technology Risk (Technically and
commercially proven).
– Terms & Conditions of O&M Contract.
Check Points Mitigation
– Long term O&M agreement (penalty and
incentive).
– Pre-operating training.
– Reasonable labor management strategy.
– Service Support Agreement.
– Operation Insurance including Business
Interruption.
– Find out alternative operator.
– Use proven technology.
– Reserve for Operation costs.
– Reserve for Major Maintenance.
– Implementation of reasonable
maintenance plan.
– Can the operator produce the products at full volume (at
reasonable cost)?
– Aging and degradation. – Accident & labor trouble.
– Drop production, decrease of sales and increase of
operation costs.
Commercial Risk
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Feedstock Supply
Risk
– Credit of Supplier.
– Reliability (track record) of supplier.
– Existence of sufficient reserve.
– Existence of alternative supply source.
– Price and volume of supply.
– Influence of the Host Government.
– Transportation or Infrastructure.
– Terms & Conditions of Supply Contract
– Can the fuel/feedstock supplier deliver the
product/s on schedule, at the agreed price,
quantity and quality?
– Drop production level or no production
Check Points Mitigation
– Find an alternative source of supply.
– Sufficient storage for operation.
– Long Term Supply Contract.
– Pass the risk to supplier.
(Price of fuel/feedstock is constant
regardless of the change of the
market.)
– Pass the risk to off-taker (PPA).
(Price of the product is indexed to
the price of the fuel/feedstock).
Commercial Risk
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Market/Price
Fluctuation Risk
– On-market product or special product
– Competitiveness of Product Price
(Costs) & Quality.
– Terms & Conditions of off-take/sales
contract.
– Global and regional market condition.
– New technology and product (is there a
market ?)
– Capability of Sellers/Off-takers
– Can the product be sold at the market, at
expected price and volume?
– Revenue will fluctuate and not be stable.
Check Points Mitigation
– Off-take Contract (take or pay)
(often mitigate volume risk).
– Price pass through to Off-taker.
– Strong sales ability of Off-taker
/Long term sales contract.
– Hedging instruments (Price
fluctuation).
– Sufficient reserve (money) for
operation.
– Sufficient equity.
– Conservative cash flow estimation
Commercial Risk
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Environmental Risk
– Compliance with law/regulation and
• ECAs : ECAs’own guidelines, World
Bank Guidelines
• Commercial Banks: Equator
Principles
– Impact of change of the environmental
law/regulation.
– Is there any limitation of activities due to
compliance of environment/social guidelines/law?
– Delay and cost overrun
– Project may not be able to continue.
– Reputation risk
Check Points Mitigation
– Prior to the project, evaluation of
environmental aspect through
environment and social impact
assessment (ESIA) or relevant
management plan (ESMP).
– Once the project started, monitor
and implement the project in
accordance with ESMP.
– Good relationship with neighboring
community and host country.
– If any environmental or social issue
arises, it should be resolved as
soon as possible.
Commercial Risk
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Inflation Risk
– During construction, price of EPC and
other cost may increase.
– During operation, operation cost may
increase.
– Does inflation have any impact on project ?
– Project cost/operation cost may increase.
Check Points Mitigation
– During Construction
• Fix the costs (e.g. EPC costs,
fees) regardless of inflation. Ifnot,
costs (e.g. local salary and spare
parts) should be estimated
conservatively.
• Sufficient contingency in the
budget.
– During Operation
• Inflation can be passed through
to Off-taker by factoring into
product price.
• Proper evaluation of
assumptions in cash-flow model.
Economic Risk
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Interest Rate Risk
– During construction, project cost may
increase as interest during construction
increases.
– During operation, increase of interest
may have impact on the economics of
the project, especially at the early stage
of the operation. (Outstanding loan is
large.)
– Does increase of interest have any impact on
project ?
– Financing costs may increase, especially at the
beginning of operation period.
Check Points Mitigation
– Proper debt sizing
– Mitigation by hedging instruments
(Ex. Interest rate swap)
Economic Risk
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Exchange Rate Risk
– During construction, mismatch
between the currency of financing
sources and that of EPC costs,
which may raise the construction
costs.
– During operation, mismatch between
the currency of the revenue and that
of the expenses, which may raise
the operation costs.
– Does fluctuation of currency have impact on the
project ?
– Costs increase during both construction and
operation period.
Check Points Mitigation
– During Construction
• Financing source and use of fund
should be matched in the same currency.
• If not, enter into currency swap.
– During Operation
• Revenue and cost including debt service
should be matched in the same currency.
If not, pass through to Off-taker.
• If financing is done in USD, off-taker or
purchaser’s payment should be done in
USD.
• Sometimes the host government supports
such payment by the off-taker (e.g. IPP).
• If the products (e.g. oil) are sold at USD,
financing should be in USD.
• Currency Swap
Economic Risk
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Restriction on
Currency Convertibility
and Transfer
– Catastrophic devaluation.
– Shortage of the reserve of foreign
currency in the host country.
– The restriction on currency convertibility and
transfer may block the company’s payments to
outside the country (operation costs, debt
services, dividends and etc).
Check Points Mitigation
– Establish Major Project Account
outside the host country (e.g. Account
for revenues, foreign operation costs,
debt services and reserves).
– Support from Host Country.
– ECA political risk cover for the
Commercial Lenders.
Political Risk
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Political Violence and
Expropriation
– Probability of Nationalization,
Expropriation, Sabotage, Riot, Terrorist
Attack, War and etc.
– Stability of Government
– Political violence and Expropriation may cause
the physical damage or cessation of the project.
– Political violence and Expropriation may
deteriorate the project.
Check Points Mitigation
– Support from Host Country (e.g.
security support (physical
protection), monetary compensation,
Government Support Letter, etc).
– ECA Guarantee to commercial
lenders.
– Part of the risk may be covered by
insurance.
Political Risk
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Change in Law
– Stability of long term government
policy on industry, environment and
tax, etc.
– Political stability of Government
– Change in Law may have negative impact to the
project.
Check Points Mitigation
– Incurred costs shall be passed
through to Government or Off-taker.
– Support from Host Country.
Political Risk
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Item Project Finance Corporate Finance
Purpose Finance to a project company.
Finance to a corporate as a
part of all over corporate borrowings.
Source of
repayment
Solely from revenue from a specific project.
From company’s activities in general.
Collateral Specific security over project assets.
Security over general company’s affairs.
Default of repayment
Lenders’ recourse is
limited to cash flow and assets of the Project.
Lenders can recourse to
company and can be fully
repaid unless the borrower
went bankrupt.
Corporate Finance vs. Project Finance
Financial Structure
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EXIM Thailand – Financing Facilities
19
EXIM Thailand
Trade Finance
Financing for Investment Projects
Export Credit and Investment Insurance
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Eligible Project : Investment Project
20
Project company has Thai national or Thai company as
a shareholder
Project Company which procure goods or services from Thailand
Project is not opposed to the law of Thailand and host country
Project is commercially viable
Project benefits or contributes to Thailand’s development
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Debt Financing
Thai Investor /
Project Company
with Thai
Shareholders
Project in
Host Country
Loan
Investment
Project in
Host Country
Equity Financing
Thai Investor
Loan
Investment
Financing Facilities for Investment Project
Direct Financing / Co-Financing / Syndication / Re-lending
Other Support
Lead Arranger / Facility Agent / Security Agent
Financial Support
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Investment Insurance
Insurance coverage against political risk of losses relating to
overseas investment i.e. losses from imposition of laws or any
actions taken by host government that adversely affect project
investment or the investor’s repayment ability
Concept
Transfer
Restriction or
Inconvertibility
ExpropriationWar and Civil
Disturbance
Breach of
contract
Risks
covered
Invested
Capital
Assets
Profits
Other monetary benefits
Principal
Interest
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Eligible Project: Investment Insurance
23
Project company has Thai national or Thai company as
a shareholder (more than 50%)
Project is not opposed to the law of Thailand and host country
Project is commercially viable
Project must be financed by EXIM Bank.
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• Insurance Period : 3 to 15 years
• Percentage of Coverage : Up to 90% of Actual Loss
Insurance Coverage
• Contract denominated in the currency can be covered : Baht, US Dollar, Euro, Pound Sterling, Yen
Currency
• Processing Fee = 0.1% x Maximum Insured Amount
• Maximum Amount = 100,000 Baht
• This fee is deductible from premium.
Processing Fee
• Determined by : Country Risk, Project Risk, Insured Period
• Collected up front each year when the policy is issued or renewed.
Premium Rate
Investment Insurance
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• Hydropower Plant• Sugar Plantation and Refinery• Logistics
Laos
• Coal MiningIndonesia
• Cement Plant• Oil Refinery• Zinc Smelter
Vietnam• Hotels• Department Store
Cambodia
• Sugar Refinery
Philippines
• Natural gas• Sugar Refinery Plant
Myanmar
• Asphalt Refinery• Retail Shop
Malaysia
• Hotels and Resorts• Housing Development
Maldives • Logistics• Rubber Assembly Plant• Spa
China
...With extensive experience in various countries in AsiaEXIM’s experience in financing for overseas investment
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1. Yangon Representative Office
Centrepoint Towers, 6th Floor, No. 65
Corner of Sule Pagoda Road and Merchant Street, Kyuaktada, Yangon, Myanmar
Chief Rep. : Mr.Woramin Thavarabha
Tel: +95 (1) 389 528-9 ext. 8612
Mobile: +95 (9) 770090796
E-mail:[email protected]
2. Vientiane Representative Office
ANZ Building, 4th Floor, 33 Lane Xang Ave,
Ban Hatsady, Chanthaboury District, Vientiane Capital, Lao PDR
Chief Rep. : Mr. Wijak Bamrungkij
Tel: +95 (1) 389 528-9 ext. 8612
Mobile: +8562055588274
E-mail: [email protected], [email protected]
Representative Office
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Disclaimer
27
This presentation has been prepared by the Corporate Business Department 3 of EXIM Thailand and is being shared with you solely for information purposes.
EXIM Thailand dose not make any representation or warranty as to the accuracy or completeness of this information.
These presentation materials may not be reproduced or disclosed to any person or entity in whole or in part, or used for any other purposes (except for this discussion today), without the prior written consent of EXIM Thailand.