Hong Kong Disneyland Project

Hong Kong Disneyland Project - Balance Sheet Financing...

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Balance Sheet Financing vis-à-vis Project Financing
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Project Financing is like a chameleon It always finds a way to take advantages of changes in the business.
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Project Financing Economically separable capital investment project which operates under a concession from the host government Project cash flows as source of funds to service the loans to provide the return of & return on the equity invested in the project
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Project Financing Comprehensive contractual arrangements with suppliers High ratio of debt to equity with limited recourse or no-recourse
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Basic Features of Project Financing An agreement by financially responsible parties to complete the project to purchase the project output to supply the project inputs to make available necessary funds in the event of disruption in operation occurs
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Project Angel Government Sponsors Banks Investors Off-take parties Suppliers Operator Contractor Project Company
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Project Structure Project Structure ENRON POWER CORP $ 223 MILLION Construction mgmt Bechtel Enterprise Ltd $ 28 million Construction General Electric Company $ 28 million Construction LENDERS BOA ($150 million) OPIC ($100 million) IDBI, etc ($95 million) Exim Bank (US) ($298 million) Eurobank Guaranter DABHOL POWER COMPANY MSEB GOM GOI
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Sponsors * Cash Waterfall : Customers ($ Denominated Payments ) Offshore Proceeds Account (Banker’s Trust) 1. 90 Day Operating Expense Account 2 . Debt Obligations Service ( 1 year 1.35x coverage ratio ) 3 . Debt Service Res. Account (6 m. worth of principal & interest) 4 . Distribution to Equity Holders
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Financial Engineering To allocate risks & rewards among the involved parties in a manner that is mutually acceptable
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Project Finance reduces Incentive Conflicts Free cash flow conflict Risk shifting Debt overhang Managerial risk aversion
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Shanghai Disneyland February 24, 2003 BA 456 Hong Kong Disneyland
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MICKEY TO FOLLOW MAC YEAR-1998 MICHAEL EISNER CMD DISNEY INTERNATIONAL DECLARES HIS INTENTION TO HAVE VENTURE IN CHINA
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BASES OF DECLARATION MCDONALD’S SUCCESS IN CHINA CHINA AN UPCOMING ECONOMY THEME PARK - THE ONLY GROWING BUSINESS IN THE DISNEY’S KITTY OTHER SEGMENTS LOSING NEEDED A GROWTH DRIVER
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DISNEY’S KITTY DISNEY ENTERPRISES INC. A WORLDWIDE
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This note was uploaded on 09/16/2011 for the course F 112 taught by Professor Ans during the Spring '11 term at IIM Bangalore.

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Hong Kong Disneyland Project - Balance Sheet Financing...

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