PROJECT FINANCE IN RUSSIAN TRANSACTIONS

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PROJECT FINANCE IN RUSSIAN TRANSACTIONS

• Tim C. Bruinsma
• Fulbright Jaworski L.L.P.
• CIS and Eastern Europe Business Forum
• November 4, 2006

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ASSESSING THE MARKET

• DEMAND
• COMPETITION
• GOVERNMENT CONTROL
• BARRIERS TO ENTRY
• HORIZONTAL INTEGRATION
• VERTICAL INTEGRATION
• TRANSPORTATION
• COMMUNICATION
• CURRENCY CONVERTIBILITY/CONTROLS
• POLITICAL RISK

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THE CORPORATE STRUCTURE

• BRANCH OFFICE
• DOMESTIC (RUSSIAN) SUBSIDIARY COMPANY
• CLOSED JOINT STOCK COMPANY
• OPEN JOINT STOCK COMPANY
• OFFSHORE STRUCTURE
• U.S. Tax Issues

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THE PRIMARY LEGAL DOCUMENTS

• NON-DISCLOSURE AGREEMENT
• COVERING TECHNOLOGY, BUSINESS METHODS, CONTACTS
• LETTER OF INTENT
• GENERALLY NON-BINDING
• WITH SOME BINDING PROVISIONS
• STANDSTILL / NO-SHOP
• NON-DISCLOSURE
• BREAK-UP FEES
• JOINT VENTURE AGREEMENT
• CONTRACTUAL
• STRUCTURAL
• INCORPORATION DOCUMENTS
• SHAREHOLDERS AGREEMENT

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ON THE BUSINESS SIDE

• EXECUTIVE SUMMARY
• DESCRIPTION OF PROJECT OR OBJECTIVE
• COMPANY OR SPONSORS
• LOCATION, SUBJECT MATTER
• FINANCIAL PROFILE
• BUSINESS PLAN
• DETAILED PLAN
• PROJECTIONS
• BINDING

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FINANCING

• EQUITY vs. DEBT
• SOURCES OF CAPITAL
• SPONSORS / PARTNERS
• PRIVATE FINANCIAL INSTITUTIONS
• Private Equity
• Lenders
• GOVERNMENT FUNDING AGENCIES
• Bi-National (U.S.- Russia, EU Russia)
• U.S. OVERSEAS PRIVATE INVESTMENT CORPORATION
  (OPIC)
• U.S. EXPORT-IMPORT BANK (EXIM)
• MULTI-NATIONAL
• EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
  (EBRD)
• WORLD BANK

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KEY TRANSACTION ELEMENTS

• OWNERSHIP
• CONTROL
• DEBT-EQUITY RATIOS
• TECHNOLOGY TRANSFER
• DILUTION
• BUY-SELL RIGHTS
• DISPUTE RESOLUTION

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MIGA Insurance
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OPIC (Insurance)