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Agarwal_Kaul - projections Comprehensive insurance against...

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Case : Poland’s A2 Motorway Background: AWSA is an 18 firm consortium with concession to build and operate toll road as part of Paris-Berlin-Warsaw-Moscow transit system. Seeking financing for the € 1bn deal (25% equity). Is being asked to put in additional € 60-90m in equity. Concession due to expire in 6 weeks. Key Issues: Assessment of project risk and allocation of risks. How can project risk best be managed? Developing a structuring solution given the time pressure.
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Case : Poland’s A2 Motorway Structure for allocation of Risk Construction Risk: Best controlled by builder and government. Fixed priced turnkey contract with reputed builder. Government responsible for procedural delay and support infrastructure. Insurance against Force Majeure, adequate surplus for contingencies. Operating Risk: Best controlled by AWSA and the operating company. Multiple analyses by reputable entities for traffic volume and revenue
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Unformatted text preview: projections. Comprehensive insurance against Force Majeure. Experienced operators, road layout deters misuse. Case : Poland’s A2 Motorway Structure for allocation of Risk Political Risk: Best controlled by Polish Government and AWSA. Assignment of revenue waterfall to government: Taxes, lease and profit sharing. Use of UK law, enforceable through Polish courts. Counter guarantees by government against building competing systems, ending concession. Financial Risk: Best controlled by Sponsor and lenders. Contracts in € to mitigate exchange rate risk. Low senior debt, adequate reserves and debt coverage, flexible principle repayment. Control of waterfall by lenders gives better cash control. Limited floating rate debt with interest rate swaps for risk mitigation....
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