HOCHTIEF Aktiengesellschaft · XETR:HOT
HOCHTIEF Aktiengesellschaft — Investor Day (November 2006)
16 slides from HOCHTIEF Aktiengesellschaft's investor day presentation, Nov 16, 2006
Slide 1: Structuring Project Finance for HOCHTIEF Concessions and Operation
Structuring Project Finance for HOCHTIEF Concessions and Operation HOCHTIEF Capital Markets Day November 16, 2006 Claudia Luckhaus HOCHTIEF Aktiengesellschaft Financial Services TURNING VISION INTO VALUE. 1
Slide 2: Financial Services at HOCHTIEF
Financial Services at HOCHTIEF HOCHTIEF Aktiengesellschaft Corporate Center Finance Investor Corporate Financial Relations Finance Services Infrastructure Real Estate • Financial Services: 9 professionals Toll-roads/ (+2 beg. 2007) Airports -bridges/-tunnels PPP / PFI • Finance structures: increasin
Slide 3: Added value of Financial Services
Added value of Financial Services • Arrange and optimize project financings - Arrangement = equity, mezzanine and debt (senior loan, project/bond monoliner, forfeiting) - Optimization = optimal debt/equity mix, powerful banking consortia, innovative solutions, financial risk evaluation, attractive f
Slide 4: Project Finance at HOCHTIEF (1) Principles
Project Finance at HOCHTIEF (1) Principles • Focus on moderate risk profile due to creditworthiness of federal or municipal authorities (e.g. public guarantors, reinsurer, exception waiver etc.) • Basically long-term project involvement . . . . . nevertheless consideration of exit strategies • Limit
Slide 5: Project Finance at HOCHTIEF (2) Fundamentals in most German PPP Project Agreements
Project Finance at HOCHTIEF (2) Fundamentals in most German PPP Project Agreements • Fiscal qualification of Project Agreement as work performance- and operation service contract (“Werkleistungs- und Dienstleistungsvertrag”) • For avoiding double VAT: separate treatment of construction work financin
Slide 6: Forfeiting (1) Principles
Forfeiting (1) Principles Definition: • Disposal of receivables to a buyer (e.g. financial institution). • The seller remains responsible for the verity (existence) of receivables Preconditions: • The legal terms in the PPP Agreement should meet the requirements of “Transferable receivables/assets”
Slide 7: Forfeiting (2) Structure
Forfeiting (2) Structure Construction Operation M P disposal of assets obligee U R B N O A I J N obligor C purchase price E K I C P debt repayment T A L 0 ∞ t TURNING VISION INTO VALUE. 7
Slide 8: Forfeiting (3) Effect on balance sheet
Forfeiting (3) Effect on balance sheet Construction period Operational period assets liabilities assets liabilities others others cash equity con- debt struction works others -> limited debt risk others equity TURNING VISION INTO VALUE. 8
Slide 9: PPP Project example: Offenbach schools project (1) Income streams / expenditures
PPP Project example: Offenbach schools project (1) Income streams / expenditures 1. Revenue 2005-2019: • Constant revenue / unitary charge paid by Offenbach district authority since 01/2005 -> fixed payment EUR 27.35m p.a. 2. Refurbishment period 2005-2009: • Construction costs approx. EUR 130m 3. D
Slide 10: PPP Project example: Offenbach schools project (2) Uses and sources
PPP Project example: Offenbach schools project (2) Uses and sources Uses Sources construction work/ debt refurbishment (forfeiting) EUR 93.9m EUR 130m project development costs of financing Unitary Charge EUR 36m1) tax Equity EUR 0.1m Total EUR 130m Total EUR 130m 12/2009 Construction Period t 1) Pa
Slide 11: PPP Project example: Offenbach schools project (3) Intelligent Finance Structure
PPP Project example: Offenbach schools project (3) Intelligent Finance Structure • SPV off-balance • Tax-reduction for SPV -> positive effect on SPV calculations • Avoiding legal termination rights of debt contracts -> positive effect on financing terms • Construction certificate permits an earlier
Slide 12: Appendix
Appendix TURNING VISION INTO VALUE. 12
Slide 13: History of Project Finance
History of Project Finance Traditional PF industries Modern PF industries • Oil and gas • Telecommunications • Energy • Media Internationalization • Power plants • E-Business • Infrastructure -> Since early 90s PFI market development in UK -> Increase in German public debt in the mid 90s, Growth of
Slide 14: General Principles of Project Finance
General Principles of Project Finance • SPV: Incorporation of the economic and legally independent project company with low commitment for sponsors/HT • Cash-flow related lending • Off-Balance-Sheet • Adequate debt / equity ratio (leverage) • Limited-recourse during all project periods • Risk sharin
Slide 15: Typical Project Finance Structure
Typical Project Finance Structure Building Facility management contractor contractor turn-key contract equity capital debt capital Special Purpose Financial Sponsors Vehicle market dividends debt service contract benefits project revenues Client (i.e. airport, toll road, public authority) TURNING VI
Slide 16: Selected tools for ongoing risk management in project finance
Selected tools for ongoing risk management in project finance Risk Analysis Risk Control Tool Identification Tool Others Enterprise Covenants Risks and Insurances back-to-back Legal, technical financial, contractual assignment risks… and Reserve accounts Due Step-In-Rights Diligence Cover Ratios Bus
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