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Case Study
Background:
Structured Financing
Structured Financing:
Obligations Match Cash Flows
) Debt capacity fully utilized
z Loans staggered to match project timetable
z Lines of credit provide debt support prior to full establishment
of project cash flows
z Limited partners provide majority of equity
z General partner provides small portion of equity
) During early years, debt service consumes most of the
expected cash flow
z Level of expected cash flow determines capacity for
intermediate-term loans
) Derivatives used to stabilize cash-flow match
Structured Financing:
Cash Flow Distribution
) Early years:
z Most of cash flows go to debt service
z Little to limited partners
z Small or none to general partner
) Middle years (after debt substantially reduced):
z Specified percentage to limited partners
z Remainder to general partner
) Late years (after debt paid & L.P.s receive specified
return):
z Small or none to L.P.s
z Most to G.P.
Who gets paid?
1st Hurdle
Amount
Lenders
Lenders
Limited Partners
General Partner
Total Project Cash Flows
Who gets paid?
1st Hurdle
2nd Hurddle
Amount
General Partner
Limited Partners
Lenders
2nd Hurddle
3rd Hurddle
P
Partner
Amount
Limited
Partners
Lenders
$140
$120
$100
$ millions
$80
$60
$40
$20
$0
1972
1973
1974
1975
1976
1977
1978
1979
Debt
1980
1981
1982
1983
1984
1985
1986
1987
year
Outcome
$60
$50
$40
$ millions
$30
$20
$10
$0
-$10
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
year
Through the 1990s
Indonesia Today
) The world's largest archipelago, Indonesia achieved independence from
the Netherlands in 1949
) Current issues include:
z Alleviating widespread poverty
z Implementing IMF-mandated reforms of the banking sector
z Effecting a transition to a popularly-elected government after four decades of
authoritarianism
z Addressing charges of cronyism and corruption
z Holding the military and police accountable for human rights violations
z Resolving growing separatist pressures in Papua New Guinea
) On 30 August 1999 a provincial referendum for independence was
overwhelmingly approved by the people of Timor
z Concurrence followed by Indonesia's national legislature, and the name East
Timor was provisionally adopted
z On 20 May 2002, East Timor was internationally recognized as an independent
state.
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