Assignment Sheet
Emerging Market Finance
Class #2, Thursday, October 20, 2005
Topic: Project vs. Corporate Finance
Case: The Chad-Cameroon Petroleum Development and Pipeline Project (A), (9-202-010)
File: chadpipe.xls
Case: Project Financing: An Economic Overview, UVA-F-1035.
Assignment Questions:
1. How are the sponsors financing this deal? How does the financing of the Field System differ from the financing of the Export System?
2. What is the World Bank/IFC’s role in this deal? Are they likely to be successful?
3. Analyze the risks and returns to Chad, Cameroon, and the Private Sponsors? How were the returns calculated? Are the risks and returns fair from each party’s perspective?
4. Will the Revenue Management Plan work? Are there aspects of the plan that you think should be changed?
5. Would you approve the deal as a World Bank/IFC board member?
Note: Integrated oil-field development and pipeline companies have unleveled (asset) betas ranging from 0.40 to 0.60. You can assume the equity risk premium is 6%.