CLASS NOTES 08072022 Dr.

Bagenda

CHAPTER 3 YESCOMBE pg 29: Project Development and Management

ROI means rate of return on investment. Sponsors prefer a higher ROI.

The company involved should observe proper corporate governance as well as

all legal issues.

UMEME, SGR, Jinja Express Highway, Entebbe express high way are all PPP
Projects but have problems because certain political or legal targets were not
taken care of.

Oil refinery deal was awarded to a consortium of Italian, and other country
companies.

Project finance is very detailed.

CHAPTER 3 DEWAR: Sources of Funding

Equity bridge loan means that a guy who is supposed to buy shares of may be
1m but has only paid 0.5m, but the company needs cash, the guy may give the
company a temporary loan of 0.5m. he may be paid back in equity or in cash.

Leverage finance is syndicated finance. It is leveraged because its tied to

certain products. Cente and Stanbic may combine to fund a project but Cente
may tie the money to a particular project that it invests it on in a particular
project e.g oil. Leveraged financing is tied to certain conditionalities before the
money is lent. Leverage financing has better terms but it is tied to specific
projects.

Mezzanine finance means that you have people who have put money in a
project but it is subordinated. Debtors take precedence over equity holders.
Subordinated debt is paid after other debtors and equity holders have been
paid. It is risky to be a mezzanine lender. The mezzanine lender lends at very
high interest rate.

Chapter 4 Dewar: Project Risks

Hedging means putting the limit to the amount of risk you can take on. E.g I
am lending you 1 billion but no matter what happens, you should at least pay
me 0.5 billion. A legal mechanism of limiting the amount or extent of risk you
can take on.

Chapter 4 of Yescombe will be done on Monday

Chapter 5 and 6 of both

Rea