Company F is an African Mobile Operator. They decide to sell to infrastructure fund C their network of Telecom towers. An SPV is formed that will own the towers. The towers are equipped with 3G and 4G antenna and 5G antenna will be deployed in the future. Company A signs a long term, availability base contract with the SPV. A subsidiary of company A signs a long term operating and maintenance contract with the SPV.

You are working for an established European Bank. For each of situations.please identify/address points. Remember that you are a banker therefore you should describe and analyse the bank's interest.

a) Parties to the project financing: please list the parties and the role(s) they can play in the project. Make assumption on their credit standing and track record/ experience in relation to the role they will play in the project

b)    Contractual relations: please draw a chart of the contractual structure highlighting the different contracts between the different parties.

 

 

c)    Cash flows: please indicate circulation of cash between parties and the order of priority you believe is adapted to this project for the usage of revenues received, i.e. the ideal cash waterfall

 

d)    Risk matrix - mitigation through contractual and financial structure. 1) List the main risks related to the project 2) Indicate which counterparty bears which risk and which contract allows transfer of risk and 3) For risks that are not fully transferred and thus taken fully or partially by the lender, list possible mitigants.

 

e) Possibility to take securities: please describe the applicable security package?

 

f)  Conclusion: opportunity for project financing or not? Please say whether you would lend to this project on a non-recourse or limited recourse basis and more importantly why. If you decide to lend.

 What are the main terms of the loan agreement you are proposing to your client?