TABLE OF CONTENTS




    Summary of Qualifications

    Resumes of Team Members


    Technical Approach

    Management Approach



Reports – Use format of Lender or Lender Group (Lenders)

Transaction Advisory Capabilities – Unique to each Lender

Representation of Official Agency and Other Lenders – Will vary by Project

The Restructuring Process

A restructuring of substantial size and complexity requires the intense, consistent, and continuing
dedicated efforts of many individuals, working as a team. The following is a summary of the
tasks to be undertaken:

   •   Preparation of Due Diligence Restructuring Report: Management of the Lender (s) will
       assign an Expert (sourced internally or externally) to develop a Restructuring Report that
       provides a current base line analysis of the economic environment, the financial situation,
       the contractual framework of the project, and a full analytical analysis of potential
       restructuring possibilities. The analysis will draw on the financial model and the new
       assumptions developed by the Expert relating to the project. The Report will include the
       financial model (perhaps audited and reviewed by other parties) after the appropriate
       sensitivity analyses is applied. It will also include a country risk analysis of the host
       country and a risk analysis of the project company.

   •   Financial Model: It is essential that the financial model for the project be carefully
       reviewed and audited. The financial model prepared by the sponsors at the time of the
       original underwriting is now outdated. The forecast economics of the project have most
       likely not been achieved, the financing and operating assumptions have changed, and the
       entire analytical framework has to be rethought. The Expert will review and analyze the
       financial model for the project, and will enhance it as may be necessary to make it more
       responsive to the needs of the Lender (s) and other stakeholders. This will advance the
       process of understanding, testing, and using the information supplied by third parties,
       including Government officials, senior lenders, and others.

   •   Financing Analysis and Strategy: The Expert will work with the Lender (s) to devise
       the optimal financial structure for the project, under the conditions that will obtain as a
       result of the restructuring.

•   Support for Fact Finding, Negotiation and Restructuring Activity: Perhaps most
    importantly, the Expert will provide continuing support for lending staff at all times
    during the development of the restructuring plan. His/her role is to provide highly skilled
    and experienced transaction support for staff members. It should work under the
    direction of the Lender’s Management, and be available to support analysis, negotiation,
    and structuring activity. The Expert offers consistency and continuity in what will be a
    highly complex and time-consuming effort.

•   Risk Sharing Analysis: The Lender (s) is generally vigilant as well as proactive in
    protecting their rights and standing in any restructuring. Any commercial lenders to the
    project, which will typically include highly sophisticated and powerful international
    banks, will aggressively seek to advance their interests, which may be adverse to the
    Lender (s). The host country government will seek to protect its interests, which also
    may be adverse to the Lender (s). The Expert will provide important support in
    developing a fair and transparent risk-sharing proposal.

                       TO THE CONCEPT OF RISK SHARING
An Expert typically approaches a loan workout or restructuring as a new underwriting or re-
underwriting of an existing transaction. In this regard, the restructuring offers the opportunity to
improve underlying documentation, upgrade support from sponsors and host governments, and
establish a fair sharing of risks among lenders and other project parties. A “global approach” can
be most desirable for Lender (s). Therefore, the Lender should anticipate requests that the
Expert be very forthcoming with information for any restructuring. In exchange for its
continuing support, Lender (s) will normally require satisfaction of certain conditions or
elements to the transaction it believes appropriate.

Initial Fact Finding Process

This approach requires a full reunderwriting of the transaction. All loan documentation must be
reviewed. The restructuring provides an opportunity to clean up any documentary flaws which
may have been discovered during the construction period, or which are discovered during the
negotiation of the restructuring.

The project documents must be reassessed in the light of new and changed conditions. Power
purchase agreements or other arrangement previously negotiated are now outdated and likely in
breach of contract by the project parties. Licenses and other governmental actions impacting the
project must be reviewed and to the extent that support is required, the nature of the support must
be articulated and negotiated with the appropriate governmental entity. Any governmental
support must be ratified. Operating agreements must be reviewed in the light of the new
conditions. Sponsor support has to be reviewed and reconsidered.

Restructuring Goal

The goal of a restructuring is analogous to the initial underwriting: all parties should undertake
to assume the risks they are best able to manage, and that they find acceptable from a business
standpoint. It is an inescapable fact that the commitment is being renegotiated because
conditions have changed for the worse, and the parties wish to change the terms of the agreement
to reflect the changed business conditions.

To do this requires a full risk analysis and re-underwriting. The potential risks to Lender (s)
must be identified, and the risk mitigation techniques identified. To the extent that the nature of
risk exposure has changed, this should be clearly understood, and the reasons why the change is
or is not acceptable from a credit and policy standpoint should be clearly identified.

The Lender (s) must be perceived as reasonable and responsible by other parties and by the
marketplace. In this regard, the Lender (s) will wish to be very transparent in its decision making
process. To be believable, and to be accepted by the various constituencies, its decision should
be fact based and clearly expressed. The final decision, and any restructuring and risk sharing
proposal, should be crisply stated, and couched in terms which are both commercially reasonable
and unambiguous, and fair.

Financial Model

It is not uncommon for the borrower/sponsor in a restructuring to be selective in the facts used to
support their request, and to ignore changes in conditions that make the underlying business
transaction fundamentally different from that originally agreed to by the parties. The Lender (s)
has acted and will continue to act in good faith. However, the Lender’s negotiated commercial
agreement was not to make a loan under any circumstances, but rather to make a loan under
certain agreed to circumstances. If the sponsor/borrower requires concessions, then the Lender
(s), as a responsible lender, must determine whether there are any concessions which can be
made in return by the sponsor or by other lenders which will assure that the credit transaction has
not deteriorated to the point where the Lender (s) are taking exposures which are fundamentally
different from what they originally agreed to.

Financial Analysis

As part of analyzing the transaction in the light of changed circumstances, it is critically
important that the Lender (s) not inadvertently take on any changed risks, which the lender had
previously thought to have mitigated. Therefore, the same thorough risk analysis must be
performed as an essential part of the restructuring analysis. A new political and economic
analysis of the host country has to be prepared to identify and quantify any material adverse
changes that have occurred in that market. New sensitivity analyses must be performed, testing
the strength of the project against economic assumptions that are materially different from those
made at the time of the initial commitment. For example, a restructuring of a power project
means the credit of the “offtaker” has to be re-underwritten in the light of current economic
conditions, and material differences in their financial condition between the initial closing and
the present. The value of any collateral taken in connection with the loan commitment has to be
reassessed. To the extent that the risk profile has changed, these changes should be articulated to
the project parties in support of a restructuring proposal.

Financial Assessment

A new base case financial feasibility assessment must be developed, including the current
economic environment, commercial conditions, and financial condition of the project, the related
parties, and the host country government. The new base case analysis and the assumptions used

are critical in demonstrating the validity of the financial reasoning for any proposals to all of the
project stakeholders.

Strategy for Renegotiation of Project

The negotiation and approval of the restructuring will ultimately involve several distinct parties,
including the project sponsors, the host country, and other lenders. Each of these parties is likely
highly sophisticated and motivated, and each party may be expected to advance their own
commercial interests energetically. The Lender (s) must be similarly vigilant in protecting their
interests, and perhaps that of their host government, and in seeking to structure a transaction that
is fundamentally fair and commercially sound.

With respect to risk sharing with other lenders, there are always certain bargained for covenants
and protective structural elements in the existing transaction that were intended to mitigate risks.
To give these up, the Lender (s) should expect the other lenders to likewise assume greater risks
than they had originally planned, reflecting the fact that the collective judgment of the lenders
regarding the transaction has proved largely inaccurate. It is not the Lender (s) role to protect
sophisticated international lenders from their own misjudgments. As a practical matter, the
processes of loan restructurings are a well-worn path, and frequently involve each lender
attempting to maximize their own recovery at the benefit of other lenders and project parties.
Many hours and significant funds are spent by lenders and their consultants to accomplish this.


Summary of Qualifications

Provide information on a project and case specific basis.




The Expert will advise the Lender (s) on the course of action to take regarding i) the
determination of risk sharing among the other project participants, and ii) the appropriate debt
restructuring schedule for the project's debt burden. In performing these tasks, the Expert will
function essentially as part of the Lender’s staff. Two considerations to keep in mind during
negotiations are flexibility and responsiveness. In a loan restructuring, the path is rarely a
straight one, and the team must be prepared to react to new information and developments in a
rapidly moving transaction, where there is much at risk.

The effort will involve a re-underwriting of the transaction, analysis of the project parties,
including sponsor and host government, a review of the project documentation, and analysis of
restructuring options, with particular emphasis on developing a proper risk sharing arrangement
with the project sponsor and other lenders.

Due diligence analysis and recommendations will be memorialized in

       1.      A written restructuring report.
       2.      An audited financial model, with improvements and adjustments made to the
               model as may be necessary.
       3.      A summary option/decision memorandum for use by Management.
       4.      A preliminary and summary term sheet for use as a base line for negotiations with
               other project parties. If a term sheet has been provided from external parties, the
               Expert and his team will analyze it, and recommend alternative approaches if
       5.      Other supporting memoranda as may be requested.

The Expert and team are available for meetings both telephonically and in person at any time as
may be useful to the negotiations. This offer extends to negotiations with other project parties,
including the project sponsor and other lending institutions. The team members should have
extensive experience as portfolio lenders, and should understand the analytical and decision-
making process that lenders generally follow.

Expert’s Statement of Work:

A.   Review of existing project documentation and other information relevant to the
     restructuring effort. For example, for a power project this may include but is not limited

            •   Fuel supply agreement.
            •   Power purchase agreement.
            •   EPC contract as it may currently exist, with particular attention to possible
                unremedied defaults.
            •   Operating agreements.
            •   Support agreements from ______
            •   All shareholder agreements.
            •   Loan and financing agreements with other lenders, and all other project
            •   All related loan documentation.

B.   Review of financial model for a) logic and consistency in the application of assumptions,
     b) reasonableness of assumptions based on the Expert’s knowledge of industry practices
     and familiarity with the project's operating environment, and c) determination of
     "equitable and fair allocation of excess cash flow" and equity participants.

            •   Audit the logic of the model to assure that it is accurate and complete.
            •   Assure that the model presents financial results in a manner consistent with
                industry practices.
            •   Review and validate project assumptions and identify the significant value
            •   Modify and enhance the financial model to maximize its usefulness.

C.   Performance of sensitivity analysis.

            •   Establish best, worst, and most likely cases.
            •   Develop and utilize new operating and economic assumptions.
            •   Perform additional sensitivity runs as may be requested by. The purpose of
                having a sound financial model is to use it to help make good decisions. The
                continuous upkeep and maintenance of the model and assistance in its use is
                essential to this engagement.

D.   Development of various restructuring options and assistance to Project Management
     staff in the selection of an optimal scenario. This will include participation in meetings
     with staff, availability for telephone conferences, preparation as needed of detailed

     memoranda, and summary option/decision memorandum for the Asset Management
     Consultative Committee and the Lender’s Management Committee.

            •   In restructurings, there are invariably multitudinous and ever changing options
                that must be considered. The Expert should become part of the staff with
                respect to work that must be done. He/she should not limit involvement, but
                be available as needed and participate actively in all deliberations regarding
                the restructuring.

E.   Analysis of the financial position and assessment of the sustainability within a proposed
     renegotiated tariff agreement with given country.

            •   Assessment of ability and willingness to perform under the terms of their
            •   Credit analysis and assessment of financial capability to perform.
            •   Review of international donor agreements, e.g. World Bank and IMF, and
                their effect on project performance.
            •   Country risk analysis.
            •   Discussion of the current regulatory and political environment.

F.   Analysis of alternative risk sharing agreements with commercial banks and lenders in
     terms of the effect on financial exposure and reasonable assurance of repayment.

            •   Analyze the likely response of commercial bank lenders to alternative
                restructuring proposals, using the financial model to engage the commercial
            •   Develop a risk sharing proposal for commercial bank lenders that is fair and
                reasonable for the commercial lenders given all the circumstances of the
                project as it currently exists.
            •   Analysis of risk previously assumed by commercial banks.
            •   Commercial banks can expect commercial reasonableness but must be
                mindful that a lender’s commitment was negotiated as, intended to be, and
                originally accepted by the commercial banks as a conditional commitment.

G.   Opinion as to the market reactions to alternative restructuring options and the likely
     impact on the project finance program.

               •   The market reaction to any proposal will depend on both the nature of the
                   project, its course of action and the nature of the market participant.

                   o For example, project sponsors and commercial lenders that are
                     participating in this transaction will seek generosity from lenders that may
                     exceed the strict requirements of the documentation.
                   o Other market participants, and other constituencies, may not desire such

               •   The Lender (s) can influence the market reaction by being transparent, fair,
                   and clear in articulating the process followed in reaching its decision and the
                   reasons for the decision.
               •   The impact on the project finance program will be conditioned not only on the
                   project sponsor and the commercial lenders in this specific transaction, but by
                   how those constituencies to which one is responsible, e.g. shareholders.


The primary goal of the Expert is to provide high quality, and valuable financial advisory
services in a seamless manner, functioning as an integral part of the Lender’s team. Importantly,
the Expert team members should have sound experience as portfolio lenders with leading
international lending institutions, including leading private and public sector lenders.

Organization Chart


                            Project Leader and Day to Day
                            Manager: Restructuring Strategy, Due
                            Diligence, Project Documentation
                            Review, Risk Sharing Analysis

        TEAM MEMBER                        TEAM MEMBER                       TEAM MEMBER

The chart is case specific.

Project Timetable

Week 1 and 2:

       •   Kick off meeting. All hands meeting.
       •   Begin review of project documents, project agreements, loan agreement, etc.
       •   Begin country economic and political risk research and analysis.
       •   Begin project credit analysis.
       •   Begin audit and review of financial model

Weeks 3 and 4:

       •   Complete review of project documents, begin written report.
       •   Complete draft country risk report
       •   Complete draft project credit analysis
       •   Complete audit and review of financial model
       •   Progress and planning meetings with appropriate parties
       •   Begin restructuring analysis

Weeks 5 and 6:

       •   Prepare draft preliminary term sheet
       •   Complete draft Restructuring Memorandum, including risk sharing analysis
       •   Draft review and analysis of financial model
       •   Run sensitivity analyses
       •   Respond to requests for supporting memoranda
       •   Complete project credit analysis
       •   Complete country risk analysis
       •   Management meetings to discuss progress

Week 7:

      •   Complete and submit draft Summary Option/Decision Memorandum for Asset
          Management Consultative Committee
      •   Submit draft Restructuring Report
      •   Submit draft preliminary term sheet
      •   Respond to requests for supporting memoranda
      •   Management Meetings to review Restructuring Report, Term Sheet, and Supporting

Week 8:

      •   Submit all final reports
      •   Team Meetings to review final reports
      •   Respond to requests for supporting memoranda


Expert and team members qualifications are stated.


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