RISK ALLOCATION PROJECT FINANCING DOCUMENTATION LAHORE 2014 PRESENTED

RISK ALLOCATION & PROJECT FINANCING DOCUMENTATION –LAHORE 2014 PRESENTED BY MR. ALI ASGHER KHAN PARTNER, HAIDERMOTABNR &CO.

OUTLINE Ø Ø Ø PART I: WEB OF CONTRACTUAL ARRANGEMENTS PART II: SECURITY DOCUMENTATION AND SECURITY CREATION PART III: KEY RISKS & RISK ALLOCATION PART IV: REGULATORY CONSIDERATIONS AND RISK ALLOCATION CONCLUSION

PART I: WEB OF CONTRACTUAL ARRANGEMENT

WEB OF CONTRACTUAL ARRANGEMENTS, CONTINUED v SHAREHOLDERS AGREEMENT v v SPONSOR AGREEMENTS EQUITY OR SUBORDINATED DEBT RESTRICTION ON SHARE TRANSFERS COMPLETION GUARANTEES v CONCESSION AGREEMENTS / IMPLEMENTATION AGREEMENT v PROJECT DOCUMENTS v v v v EQUIPMENT SUPPLY AGREEMENTS ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENTS OFF-TAKE AGREEMENT OPERATIONS AND MAINTENANCE AGREEMENT INPUT SUPPLY AGREEMENTS LAND DOCUMENTS CONSENTS AND APPROVALS BONDS AND GUARANTEES

WEB OF CONTRACTUAL ARRANGEMENTS (CONTINUED) v FINANCING AGREEMENTS v LIMITED RECOURSE LOANS v FINANCING AND TERM SHEET v COMMON TERMS AGREEMENT v FACILITY AGREEMENTS v PROJECT FUNDS AGREEMENT v INTER - CREDITOR AGREEMENT

SECURITY DOCUMENTS AND SECURITY CREATION v v v v MEMORANDUM OF DEPOSIT OF TITLE DEEDS (MODTD) LETTERS OF HYPOTHECATION (LOH) SECURITY TRUST DEEDS ASSIGNMENT DEED DIRECT AGREEMENTS LETTERS OF LIEN SHARE PLEDGE AGREEMENTS

KEY RISKS & RISK ALLOCATION - I v PRE - PROJECT DEVELOPMENT RISKS v CONCESSION BONDS AND GUARANTEES v FEASIBILITY STUDY v PROJECT COMPANY FORMATION v ADVISORY FEES (E. G LEGAL, TECHNICAL, FINANCIAL, INSURANCE ETC. ) v ADVANCE PAYMENTS TO EPC CONTRACTORS v ADMINISTRATIVE COSTS

KEY RISKS & RISK ALLOCATION - II v CONSTRUCTION COMPLETION & COMMISSIONING RISKS v v v v TECHNOLOGY AND DESIGN PRICE UNFORESEEN SITE CONDITIONS ASSOCIATED INFRASTRUCTURE & ANCILLARY FACILITIES TRANSPORTATION COMMISSIONING AND TESTING VARIATION & CHANGE ORDERS DELAYS AND LIQUIDATED DAMAGES PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES DEFECTS LIABILITY COST-OVERRUNS FORCE MAJEURE CONTRACTOR PAYMENTS – BONDS AND GUARANTEES

KEY RISKS & RISK ALLOCATION - III v LAND RISKS v DUE DILIGENCE ISSUES v CLEAR TITLE v ENCUMBRANCES v OPERATIONAL PERIOD MARKET RISKS v PERFORMANCE v OFF- TAKE AND PRICING v TAKE OR PAY v MINIMUM REVENUE GUARANTEES v INPUTS AVAILABILITY AND PRICING v PAYMENT SECURITIES v FORCE MAJEURE v MACHINERY BREAKDOWN

KEY RISKS & RISK ALLOCATION - IV v FORCE MAJEURE v RELATIONSHIP WITH INSURANCES v COMPENSATION AND RELIEFS v POLITICAL RISKS v CHANGE IN LAW v CHANGE IN TAXES AND CUSTOM DUTIES v CHANGE IN GOVERNMENTS’ AND POLICIES v FOREIGN EXCHANGE AVAILABILITY v CONSENTS AND APPROVALS v LAW AND ORDER AND SECURITY SITUATION

KEY RISKS & RISK ALLOCATION - V v LOSS OR DAMAGE TO ASSETS v TITLE TO ASSET RISKS v ENVIRONMENTAL RISKS v INTELLECTUAL PROPERTY RIGHTS RISKS v EXCHANGE RATE RISK v INSOLVENCY RISKS v DEFAULT RISKS v DISPUTE RESOLUTION v LIMITATION OF LIABILITY

KEY RISKS & RISK ALLOCATION - VI v PROCUREMENT RISKS v BIDDING PROCESS v SINDH PUBLIC PROCUREMENT ACT & RULES v PUNJAB PUBLIC PROCUREMENT ACT AND RULES v PUBLIC PRIVATE PARTNERSHIPS

FOREIGN FINANCING IMPORT OF PLANT & MACHINERY FOREIGN ACCOUNT RELATED ISSUES NON RESIDENT PLEDGE ISSUE ADVANCE PAYMENT RELATED ISSUES

THANK YOU