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Financial structuring

Financial structuring consists of selection of proper financial parameters in order to fully utilize the potential of a given localization. The parameters are defined by investor’s expectations regarding return on investment and sources of finance.

Choice of debt level and form of equity not only determines the profitability of the project but also influences the risk related to debt service in case of worse wind conditions and energy or green certificate’s price drop.

The following parameters are determined in cooperation with banks:

Debt ratio, equity and its forms

  • Conditions precedent
  • Payment schedule
  • Financial parameters
  • Reserve accounts
  • Collateral
  • Operation conditions and financial covenants

Tundra Advisory constantly analyzes the ability of the project to obtain external financing, especially availability of EU and NFOŚiGW subsidies and bank loans.

Due to the character of the investment in wind farms, a non-recourse project finance formula is often recommended, as it minimizes the investor’s risk to the equity. However, it requires a long term agreement for energy and green certificates off take (so called PPA/CPA) in order to secure that financial cash flows cover operational costs and debt service.

Through direct contact with most of the entities willing to sign such an agreement and thanks to our experience we have the know – how on parameters expected by lending institutions.

Our main task at this stage is to define financial needs and expectations of the investor and a project in order to prepare and negotiate the best market offer on external financing.

This complex process requires:

Prospectus preparation

  • Bank road show and initial loan conditions preparation
  • Explanation and negotiations of initial financial conditions
  • Choosing the best offer
  • Choosing the official bank advisors (technical, legal, insurance)
  • Initial due diligence report preparation – explanation of main issues and lacks
  • Continuous contact with bank advisors leading to final due diligence report without comments
  • Loan agreement and collateral negotiations (in cooperation with legal advisor)
  • Signature of loan agreement – so called financial closing
  • Supervision of completion of conditions precedent