Reading & Video Materials Before Class

Unit 1

Project & Corporate Finance

Debt & Equity Characteristics

David Linnan

January 09, 2006

[pdf]

[ppt]

1. Klein & Coffee pp. 395-425 (chapter on securities markets)
   
2. August 11, 2005 testimony of Howard Chao on China and the Capital Markets at http://www.omm.com/webdata/content/newsevents/HC_Testimony.pdf
   Is Chao talking about the same thing as Klein & Coffee? How do you understand the differences?

Unit 2

Project Finance as Complex

David Linnan

[pdf]

[ppt]

1. View Is the International Water Business Really a Business? (Jean-Francois Talbot @ World Bank B-Span 02/13/02;  88 min, Real Player)
   
   
2. Read
   
   a. David Campbell & Donald Harris, Flexibility in Long-term Contractual Relationships: The Role of Co-operation, 20 Journal of Law and Society 166 (1993)
   
   b.Robert J. Phillips, Contract Design, Concession, Award, and Negotiation in Infrastructure Finance (Training Manual, World Bank Institute 2000)

Optionally, if you are not familiar with comparative aspects of common law contracts law or civil law of obligations red-hots read Arthur von Mehren, A General View of Contract in VII International Encyclopedia of Comparative Law, Martinus Nijhoff, Hague, 1982, pp 3-23

Optionally, to hear the counterarguments that water supply should not be a private sector-commercial product, reh-hots should view Water in Public Hands:  An Alternate Perspective (David Hall @ World Bank B-Span 03/19/02:  112 min, Real Player)

Unit 3a

Interest & Discount Rates

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Read Klein & Coffee, Business Organization and Finance (9th ed) pp. 316-36
   
2. Problem Set A under course webpage “Problems”       

Unit 3b

Payment Streams & Present Value

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Read Klein & Coffee, Business Organization and Finance (9th ed) pp. 237-90
   
   
2. Do Problem Set B under course webpage “Problems”       

[Problem Set B answers will be distributed in advance to UI/UGM instructors, leave to them how to check student homework]

Unit 4

Risks, Internal Rates of Return & Taxes

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Read
   
   (a) Read Klein & Coffee, Business Organization and Finance (9th ed) pp. 358-68
   
   (b) Harry Sasson, Managing Risks Through Financial Markets (World Bank Institute, March 1, 1998)
   
   
2. Do Problem Set C under course webpage “Problems”       

Optionally, red-hots may also wish to try Problem Set D.

[Problem Sets C & D answers will be distributed in advance to UI/UGM instructors, leave to them how to check student homework]

Unit 5

Islamic Project Finance

Waleed El-Ansary

George Washington University

[pdf]

[ppt]

1. Read in advance of class:

(a)Introduction to Islamic Finance (HBS Case Study)

(b)The International Investor: Islamic Finance and the Equate Project (HBS Case Study)

Unit 6

International Project Finance and Differing Laws

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Barry Nicholas, French Law of Contract, Butterworth, London, 1982, pp 1-55 Read Nicolas as simple introduction to the law of obligations under the Civil Law, which is close to but not quite the same thing as the law of contracts. You all took contracts as first year students, so how is the law of obligations different or the same?
   
   
2. Lesguillons, Frustration, Force majeure, Imprevision, Wegfall der Geschaeftsgrundlage, 5 Droit et Practique du Commerce International 507 (1979)
   Read Lesguillons as closer treatment of some of the changed circumstances doctrines under Civil and Common Law systems, illustrating the idea that the closer you look the more you see that the law of contract and the law of obligations are not exactly the same thing.
   
   
3. Read in word document form entitled Contract Frustration and the Civil Law in Asia: Understanding Changed Circumstances and Financings as entailing the practical application of the above the last time projects blew up post-1997 Asian Financial Crisis.
   
   
4. How do you answer the question regarding the above in the international project finance context where the custom is that often international financial jurisdiction (common) law will apply to international financing agreements, but things like operational contracts would typically be subject rather to local Civil Law versions of the law of obligations (because they concern operations on the ground in country X, rather than securities sold or bank loans booked in an international financial center)? What is the effect of limitations on choice of law? How would these differences find expression in things like the terms of the Mecklenburg complex of contracts listed in the offering circular annex?
   
   
5. Can our class members with some experience in China tell us what the 1999 Unified Chinese Contract Law is based upon, and whether it makes a difference? In lawyers’ parlance, who cares about all of the above?
   
   

Unit 7

Public and Private Insurance as Risk & Credit Enhancement for Project Finance

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Review October 25, 2004 presentation of Laws 602 Corporate Finance at:
   http://www.lfip.org/laws602/stream.htm
   
   
2. Browse as representative institutions
   
   (a) Overseas Private Investment Corporation (OPIC website as US government-affiliated political risk insurer)
   
   (b) Export-Import Bank of United States (EXIM website as US government-affiliated export credit provider)
   
   (c) Exports Credit Guarantee Department (ECGD website as UK government-affiliated insurer)
   
   (d) Servizi Assicurativi del Commercio Estero (SACE website as Italian government-affiliated export credit provider)
   
   (e) ECA Watch (NGO monitoring export credit agencies)
   
   
3. View
   
   (a) Christina Westholm-Schroerder, Innovation in Political Risk Insurance (World Bank Institute 2000 presentation)
   
   (b) Robert Harsh, Guaranteeing Revenues for Infrastructure Projects (World Bank Institute 2000 presentation)

Unit 8

Karaha Bodas: Commercial Arbitration & Transnational Litigation Circuses

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Look at the March 1, 2004 streaming video describing Karaha Bodas accessible at
   
   http://www.lfip.org/lawe506/stream.htm
   
   
2. Read a selection of the competing arbitral and litigation decisions at
   
   Preliminary (September 30, 1999) and Final (December 18, 2000) Arbitral Awards Between Karaha Bodas Company L.L.C., a Cayman Islands company (Karaha Bodas), Perusahaan Pertambangan Minyak dan Gas Bumi Negara, an Indonesian state-owned company (Pertamina), and PT. PLN (Persero), an Indonesian state-owned enterprise (PLN, as attachment to Petition to Confirm Arbitral Award and to Enter Judgment in Favor of Petitioner, Civil Action No. H01-0634, filed February 21, 2001 in US District Court, SD Texas Houston Division)
   
   In the Matter of an Arbitration Between Karaha Bodas v. Pertamina, 190 F. Supp. 2d 936 (USDC SD TX 2001)(original action to enforce arbitral judgment before Texas federal district court)
   
   Final Judgment in Pertamina v. Karaha Bodas and PLN, No. 86/PDT.G/202/PN.JKT.PST (Central Jakarta State Court, August 27. 2002)(unofficial translation, overturning Karaha Bodas Arbitral Awards)
   
   In the Matter of an Arbitration Between Karaha Bodas v. Pertamina, Motion to Register Judgment, 264 F. Supp. 2d 470 (USDC SD TX 2002)(motion for preliminary anti-suit injunction against Pertamina proceedings in Central Jakarta District Court)  
   
   Karaha Bodas v. Pertamina and Ministry of Finance RI, Docket Nos. 02-7513(L), 02-7515(CON), 02-7547(XAP), 02-7715(CON), 02-7717(CON), 02-7723(XAP) (2d Cir. December 10, 2002)(appeal from order permitting execution against funds in B of A trust accounts)
   
   
3. Third, for background in practice look at the following sources


Complex Issues in International Arbitration (Best Practices Roundtable)

A Practical Guide for Drafting International Arbitration Clauses

1958 New York Convention on the Enforcement of Arbitral Awards

 

OPIC & Dispute Resolution

Robert O'Sullivan, Esq.

Associate General Counsel
for Dispute Resolution
Overseas Private Investment Corporation

[pdf]

[ppt]

1. Review the OPIC website at:
   
   http://www.opic.gov/
   
   
2. Review MEMORANDUM OF DETERMINATIONS: Expropriation Claim of MidAmerican Energy Holdings Company (formerly CalEnergy Company, Inc.),  Contracts of Insurance Nos. E374, E453, E527, and E759

Nat'l & Int'l Banking Regulation (Capital Adequacy & Basel Accord II):
Corporate Finance Risk Evaluation & Pricing

David Linnan

Univ of South Carolina
School of Law

[pdf]

[ppt]

1. Read
   
   (a) BIS press release June 26, 2004 re Basel II Accord on capital adequacy
   
   (b) BIS Working Paper #159 The term structure of credit spreads in project finance (August 2004)
   
   (c) Quantitative Impact Study 3 – Overview of Global Results (Basel Comm. On Banking Supervision May 5, 2003)
   
   
2. View
   
   (a)  Infrastructure in East Asia & Pacific:  The Way Forward, July 27-29, 2004 (ADB & World Bank Bali Workshop)
   
               (i)  Agenda
   
               (ii)  Powerpoint re funding requirements
   
   
3. View Bank Supervision, Market Discipline, and the Threat of Financial Stability (Mark Flannery @ FMAI Dublin 06/05/03; 39 min, Real Player)
   
   
   Optionally, red-hots may wish to read the entire final report Basel II: International Convergence of Capital Measurement and Capital Standards:  a Revised Framework (Basel Comm. Publ. No. 118, Nov 2005)

Regulatory Framework & Concessions

David Linnan

Univ of South Carolina
School of Law

October 18, 2004

[pdf]

[ppt]

1. Read
   
   (a) Concessions for Infrastructure:  A Guide to Their Design and Award (World Bank Toolkit 1998)
   
   (b) Graham Coop, Long-term Energy sale Contracts and Market Liberalisation --  Are They Compatible (November 5, 2002)
   
   (c) Ashley Wright, LNG Contracts Asia Pacific Review (July 2004)
   
   
2. Browse Utilities Regulation:  Principles for Regulating Private Infrastructure (World Bank)

Basic Accounting

David Linnan

Univ of South Carolina
School of Law

October 30, 2004

[pdf]

[ppt]

Relational or Long-term Contracting With Changed Circumstances (Civil Law Versus Common Law Jurisdictions in Asia)

David Linnan

Univ of South Carolina
School of Law

November 1, 2004

[pdf]

[ppt]

Valuation in the Market

David Linnan

Univ of South Carolina
School of Law

November 6, 2004

[pdf]

[ppt]

Dispute Resolution, Project Failure & Consequences

David Linnan

Univ of South Carolina
School of Law

November 22, 2004

[pdf]

[ppt]

Project Finance as Project Evaluation Exercise

David Linnan

Univ of South Carolina
School of Law

November 27, 2004

[pdf]

[ppt]