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Contractors World  - UK & Ireland
2014 Vol 4 No 2
 

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  Turning a Dream into a Reality - A non-banking financial solution - Page 3 of 5

A Thames Estuary hub will easily connect to road, rail and sea links throughout the UK and continental Europe

 

 

 

Stage 1: Equity Financing

All non-bank debt structures allow for an initial build-out repayment holiday to take the project through to stabilization.

But from breaking ground on WSC to stabilization (when revenues are generated) we are probably looking at some five or as much as 10 years before reaching that stage.

Because the ‘build out’ capital and interest is capitalised, none of the debt structures would be viable over such a long period. So it would be best to secure the first stage of funding as equity, which can be delivered through the Private Venture Fund.

This is a range of equity structures that will deliver 100% finance (£10bn WSC stage one) against a maximum 50% equity.

Operated by a private bank, and with access to $100’s of billions of private investment for major project financings, this funder would also, quite likely, offer some of the funding as a loan at (currently c2%) to compensate for the long lead time on realizing the equity investment.

The big attraction for this particular fund is projects that can show they are going to be the ‘biggest, best and most innovative’ in their sector, which is a claim that WSC would certainly be able to make.

Stage 2: Private Debt Financing

When WSC can be seen to be just two years away from stabilization, we can introduce WSC stage 2 financing through the Project Finance Line of Credit (PFLC) program.

This is funded by private investors collateralizing a bank instrument, which is then entered into trade, against which a bank provides the line of credit to the company that puts this structure together.

This is where the loan comes from. Not the bank, not the private investors, not the bank instrument itself or the trader.

The loan is provided through the company that actually structures the loan. The schematic on the next page illustrates the loan structure, although this is shown at a very high level.

The whole process can take between 90 and 120 days although, for WSC stage 2 of £10 billion funding, perhaps a little longer.

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