Question
An international oil major is planning to set up a crude oil refinery project in an emerging Asian country. It is planning to set up
An international oil major is planning to set up a crude oil refinery project in an emerging Asian country. It is planning to set up the refinery using project finance loan.
Tabulated below is a summary of key financing terms of a petroleum refinery
SUMMARY OF FINANCING TERMS OF A PETROLEUM REFINARY ("TERMSHEET") | ||
Borrower | : | Refinery Co. Pte Ltd, a limited-liability company |
Lenders | : |
|
Loan Amount | : | USD50 Million Project Finance Loan |
Purpose | : | To finance the building and construction of a petroleum refinery |
Final Maturity | : | 5 years from the date of full loan drawdown with 5 equal yearly instalments |
Repayment | : | Loan to be fully repaid in 5 equal annual instalment |
Interest margin | 6-month LIBOR + 5% p.a. | |
Mandatory Prepayment | : | The Borrower to apply 60% of any Excess Cash in any year to prepay the loan |
Securities / Collaterals | : | Standard securities and collaterals including but not limited to the followings:
|
Financial Covenants | : | Debt Service Cover Ratio ("DSCR") must be at least 1.15x (times) at all times. |
Event of Default ("EOD") | : | Standard Event of Default including, but not limited to the followings:
In the event of EOD outstanding, Lenders may,
|
If the petroleum refinery project generates Excess Cash of US$10 million in year 2, calculate the ending project finance loan principal outstanding at the end of year 2 following scheduled loan repayment and Mandatory Prepayment.
Show your computation.
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