Whether your company undertakes concession agreements, privatization or any type of public-private partnership project, we at MPG will help you seamlessly coordinate all of the functions across interconnected sectors, and structure the transaction so as to bring the project to fruition while optimizing the capital management.
Our TAS encompass the following areas of practice:
Due Diligence. Our work includes the study of the project proposal, feasibility study reports, engineering study reports, sovereign or sub-sovereign approvals (including sovereign guarantees), approval documents provided by the taxation; environmental protection; and customs administrations, purchase contracts, construction contracts, contracts for the supply and sale of project equipment, authentication and legalization of documents and their certified translation. The due diligence entails a series of investigations, such as checks of creditworthiness databases, Central Credit Registers, fact-checking with contracting authorities and external vendors for AML/CFT, KYC, and FCC checks.
Credit Report. This is the output of our Due Diligence, which is presented to our partner lenders and underwriters with the aim of obtaining a Credit Facility to finance our clients project.
Credit Enhancement & Financial Structuring. Many governments, globally, are increasingly promoting PPPs to attract foreign direct investment and procure financing by private lenders, thus obtaining off- balance-sheet financing. Lenders, for their part, undertake part of the project risk but are rewarded with higher profit margins than with standard corporate lending transactions. In order to eliminate or mitigate the risk associated with financing PPP projects, lenders may require the transaction to be structured with contingent risk management mechanisms such as stand-by letters of credit (SBLC) or Sovereign Guarantees (SG), which cover the lender should the main obligor default on their payment obligations. Additional credit enhancement can be achieved by way of first demand guarantees, such as performance bonds and advance payment bonds, which provide protection against non-performance of contractual obligations arising under EPC contracts. Furthermore, there are a number of insurance structures that can be used to achieve credit enhancement or credit substitution.
Legal & Contracts. An early correct structuring of the legal framework of the project is of paramount importance for its successful execution. The contract’s verbiage, for instance, must be carefully crafted so as to ensure the enforceability of its provisions in an international arbitration court.
Tax Advisory. Correct project planning, from a tax structuring perspective, entails optimization of the project cash flows. Our tax advisory services include transnational transfer pricing strategies, international tax compliance and treasury management advisory.
Closing Assistance. MPG provide closing and ongoing post-closing assistance, including loan agreement and debt restructuring counseling. This assistance is rendered by renegotiating the interest rates on the credit facility and/or obtaining an extension on the maturity date whereon the company’s liabilities become due, so as to eliminate, or at the very least, reduce the main obligor’s risk of default on its financial obligations by decreasing the cost of capital.