Power Project Acquisitions: Due Diligence and Valuation
March 22-23, 2018
New York, NY

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Overview

This training program is designed for professionals working in the power project infrastructure sector working on asset acquisitions predominantly in the thermal IPP space.  The seminar begins with detail on the due diligence process of identifying legal risk of a purchase.  Examples of acquisition financing approaches are then presented followed by a guide to environmental permit issues which should be of concern.  The first day concludes with a thorough review of technical issues to assure that the purchaser fully understands of all aspects of plant operation, maintenance and production cost detail.

The second day begins with asset financial modeling inputs, assumptions, forward market revenues and fuel cost concerns.  A review of accounting and tax considerations for the asset will follow.  A final program block will focus on “What is the Asset Worth?” including identifying adders or subtractors to an offer price.  The valuation portion of the program will identify risks and concerns of the purchase concluding with a comprehensive wrap-up of the acquisition process.

 In summary, this seminar will explore all disciplines involved in evaluating and valuing project purchases and cover all topics typically found in power plant acquisitions.

Learning Outcomes

  • Manage acquisition diligence
  • Create an acquisition transaction schedule
  • Prepare a comprehensive due diligence acquisition report
  • Prepare for acquisition negotiations
  • Prepare a budget and acquisition evaluation costs
  • Attempt to avoid litigation by implementing best practices for due diligence
  • Anticipate post acquisition issues
  • Review sources/uses of future cash flows

Credits

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.2 CEUs for this event.

 

Requirements for Successful Completion of Program

Participants must sign in/out each day and be in attendance for the entirety of the course to be eligible for continuing education credit.

Instructional Methods

Case Studies and Power Point Presentations will be used to present materials for this course.

Agenda

Thursday, March 22, 2018

8:00 – 8:30 a.m. :: Registration & Continental Breakfast


8:30 – 9:30 a.m. :: Due Diligence Process Preview


9:30 – 10:30 a.m. :: Acquisition Agreements – Overview and Anatomy

  • Pros and cons of purchase price, working capital, and “black box” model
  • Purchase price allocation for taxation
  • Representations and warranties
  • Indemnification, baskets, caps, survival periods
  • Conduct of business between signing and closing
  • Arbitration versus litigation
  • Legacy indemnity liabilities

10:30 – 10:45 a.m. :: Morning Break


10:45 a.m. – 12:30 p.m. :: Navigating Deals for Power Plants

  • Review notes to financial statements
  • Target’s accounting practices and state of affairs of books
  • Open audits / tax years

12:30 – 1:30 p.m. :: Group Luncheon


1:30 – 2:30 p.m. :: Technical Due Diligence

  • State of the asset
  • Performance and test reports
  • Budget methods, productivity improvement
  • Capex requirements for known upgrades
  • Is the plant under an LTSA? Can it be cancelled?
  • OEM versus aftermarket parts going forward

2:30 – 3:00 p.m. :: Networking Break


3:00 – 5:00 p.m. :: The Plant as it is Today

  • Review of operational records – outage reasons, quality of the staffing up to this point, etc.
  • Safety records: recordable, lost time, near miss, etc.
  • Minutes of regular safety meetings
  • Maintenance records – initial outage cycle assumptions, capacity factors, dispatch parameters, etc.
  • Trends in operating parameters: temperatures, pressures, vibrations, amperage draw, flow rates, etc.
  • Outage history: forced, unplanned, planned:  root cause analysis
  • Review recent insurance inspection reports & recommendations
  • Detailed review of spare parts inventory: obsolete parts, condition, periodic inspections, lead times
  • Detailed review of CMMS program: priority ranking system, open and closed work orders, aging report on open WO’s, routine planned, preventive and condition based maintenance philosophy
  • Sub-contracted vs. in-house maintenance resources
  • Plant O&M contract terms and provisions
  • Plant asset manager and energy manager contracts
  • Compliance with permits and their renewal cycles
  • Results of any ISO or PPA required capacity tests
  • Electrical interconnection contract compliance
  • Any capacity payment curtailments resulting from failed tests or unplanned/forced unavailability
  • Operational costs for current staffing
  • Major maintenance cycles: OEM recommended vs. actual, schedule, starts or hours based, peak fire effect
  • Planning and funds sources/availability for major maintenance activities

5:00 p.m. :: End of Day One

5:00 – 6:00 p.m. :: Networking Reception


Friday, March 23, 2018

8:00 – 8:30 a.m. :: Continental Breakfast


8:30 – 10:00 a.m. :: Financial Modeling

  • Historical financials
  • Fuel assumptions including commodity and transportation
  • Prior asset sale pricing assumptions
  • Preparation of the acquisition pro forma
  • Contingencies for:
    • Litigation in process
    • Casualties under repair
    • Permit violations
    • Upcoming overhauls
  • Forward price curve assumptions for modeling
  • Discussion: energy basis differentials and transmission congestion between the generating node and the market hub
  • Legacy insurance or finance requirements (such as revenue puts or failed start insurance)

10:00 – 10:30 a.m. :: Networking Break


10:30 – 11:30 a.m. :: Acquisition Financing Issues

  • Financing outs
  • Cooperation with financing
  • Certainty of funds, material adverse effect (sunguard protection)

11:30 a.m. – 12:30 p.m. :: Group Luncheon


12:30 – 1:30 p.m. :: Environmental Due Diligence

  • Identifying permit constraints
  • Addressing permit violations
  • Permit renewal risks
  • Stress case impact of future EPA actions

1:30 – 2:45 p.m. :: Valuation of the Asset – What is it Worth?

  • Introduction to analysis techniques to determine asset worth – discounted cash flow, market based value, etc.
  • How these methods can be applied to the entire plant or just a sub-system
  • Adjustments to value- delayed maintenance expense
  • Adjustments to value- reconfiguration to make plant more flexible to meet grid requirements (Faster starts, lower turndown, etc.)
  • How have market conditions changed since the plant was constructed? Was it on a PPA and now a merchant?
  • Was it intermediately loaded and now daily peaking?
  • How have these operational changes affected long-term maintenance assumptions?

2:45 – 3:15 p.m. :: Networking Break


3:15 – 4:00 p.m. :: Panel Discussion: Going Forward – What’s the Plan?

  • New O&M contractor? New asset and energy managers?
  • Shift from OEM to aftermarket parts?
  • Shift from a PPA to a financial offtake agreement such as a heat rate call option
  • Goals of the new investor – ROI, hold time, work out and then flip, etc.
  • Known upgrades such as plant water disposal, DCS replacement, turndown improvement, or improve remote monitoring

4:00 – 4:30 p.m. :: Pulling it All Together

  • Development of target offer price for the asset
  • Negotiation points for the deal team – adders or sub tractors to allow flexibility with the seller
  • Closing date timing
  • Replacement contractual services agreements
  • Transition to new O&M and asset managers
  • Wrap – up on distribution of the reserve accounts

4:30 p.m. :: Project Power Acquisitions: Due Diligence and Valuation Concludes

Instructors

Howard M. Steinberg, Of Counsel, Shearman & Sterling LLP

Howard Steinberg is “Of Counsel” to the project development and finance group of the international law firm of Shearman & Sterling LLP. He concentrates on transactions involving the energy sector and focuses on the power industry in particular. He has represented sponsors, offtakers, fuel suppliers, contractors, operators, underwriters and lenders in the development, acquisition, restructuring and privatization of power projects around the world. His two-volume tome on engineering, procurement and construction contracts is published by Routledge, Taylor & Francis Group.


Jeffrey W. Schroeter, Managing Director, EnEx Advisors, LLC

At EnEx, he is responsible for advising on generation assets and power markets including development issues and PPA renewals.  At Genova he led development and project financing of quick start peaking projects and the 550 MW Hobbs NM combined cycle project. Prior to founding Genova, he was VP Merchant Plant Development at Panda in Dallas, where he developed 8,400 MW of combined cycle power plants now in operation.  At prior IOU’s he held positions in project development and was renewable energy manager developing one of Texas’ first wind farms.  He began his career in operations, generation planning and project engineering.  He is a past Chair of the ASME Power Division and has served as President and Board Member of the Gulf Coast Power Association.  He has served on the PowerGen conference program committee for 17 years and has been named Dallas Engineer of the Year. 


Jason Y. Pratt, Counsel, Shearman & Sterling LLP

Jason Y. Pratt is “Counsel” and co-head of the global environmental practice of Shearman & Sterling LLP. His practice focuses on the impact of environmental and climate change laws and regulations on commercial transactions.  He has advised companies and financial institutions as lead environmental counsel in the context of mergers, acquisitions, divestitures, project financings, real estate transactions, bankruptcy proceedings, regulatory compliance matters and governmental cleanup programs.  In addition, Jason advises high net worth individuals in the context of land preservation and conservation easements.  


Chris Klausner, Managing Director, Black & Veatch Management Consulting, LLC

Chris Klausner has responsibility for providing technical advisory services and direction for clients for Black & Veatch Management Consulting business. He has a B.S. in mechanical engineering, M.B.A, and over 25 years of power industry experience.  He is responsible for performing independent engineering assessments for project lenders, developers, owners and sponsors pursuing acquisition of generation assets globally. These reviews provide technical, commercial, and financial analysis in the following areas: technology, environment, plant overall design and performance, project contracts (power purchase; operations and maintenance [O&M]; major maintenance; engineering, procurement and construction [EPC]; fuel supply; steam sales; etc.), including liquidated damages provisions, O&M expense projections, financial pro forma modeling, construction methods and schedule, and project capital costs.


Mark Manley, Manager,  Black & Veatch Management Consulting, LLC

Mark Manley is a manager in Black & Veatch’s management consulting business and has nearly twenty years of experience in energy and financial markets. He has project management experience with independent engineering assessments of solar, wind and geothermal portfolios and electric vehicle market studies. Prior to joining Black & Veatch, he managed electric and natural gas vehicle regulatory program development at an investor-owned utility; as well as leading valuations in the same utility’s merchant solar and offshore wind group.


Raymie Daroga, Assurance Partner, BDO

Raymie has over 30 years of experience in public accounting, including seven years in Canada and four years in Southern Asia, managing client engagements for large companies in power generation, oilfield services, distribution, manufacturing, and technology sectors.

His professional experience includes serving public and private companies and executing a variety of audit and financial reporting engagements for some of the firm’s largest clients. He has managed risk assessments and development of audit plans, and provides technical expertise on complex accounting and financial reporting issues to clients, the firm’s audit teams and executive management.

Raymie is one of the lead partners in BDO’s Power & Utilities audit practice and works extensively with large independent power producers in the United States.

He is one of the lead presenters in BDO’s Accounting & Tax Updates for clients and has provided extensive training on various accounting topics both within BDO and other professional organizations.


Joseph Cabaniss, Tax Partner, BDO

Throughout his 25 years in public accounting, Joe has proven to be skilled in serving closely-held and middle market clients in a variety of industries that includes power generation, renewable energy, construction, and manufacturing & distribution. He assists his clients with staying abreast of current issues in the ever changing tax landscape, as well as planning for federal, state and international issues.


Laurent Williot, Managing Director, BDO

Laurent, a Managing Director in our New York office, has over 20 years of experience in audit and acquisition advisory services. He has assisted both financial investors and strategic buyers in cross-border transactions covering multiple industries.

Laurent has been involved in numerous transactions in the power and utilities sector, including regulated electric distribution and transmission companies as well as water and gas utilities. He has extensive experience assisting clients analyze key features of regulated businesses, including rate cases and rate base, regulatory assets and liabilities, cost recovery and trackers, seasonality and conservation, capex, FERC filings, AFUDC, CIAC, etc.

Laurent also has significant experience with deals related to electricity generation (coal, gas, nuclear, etc.), and renewable energy operators (wind, solar, hydro, biomass, etc.). He has also led transactions in sub-sectors related to the industry, such as demand-response, district energy, CHP, fuel cells, nuclear waste, energy retailers and service companies. Over the last ten years, Laurent has been involved in well over 100 transactions that, cumulatively, exceeded $100 billion. His clients include large private equity firms, infrastructure investors, and Sovereign Wealth funds, as well as domestic and foreign corporate buyers seeking merger and acquisition opportunities in the energy and infrastructure sector.

Prior to joining BDO, Laurent worked at PwC, EY, S&P and Andersen in transaction services and audit and covered a large range of industries, including manufacturing, services, hospitality, mining, utilities, etc.. He has lived in New York City since 2000 and was based in Russia and Kazakhstan from 1995 to 2000 where he advised Andersen’s clients on privatization and acquisitions. In the CIS and Central Asia. Laurent started his career in France.

Laurent has an engineering degree from France’s National Institute of Agronomics Paris-Grignon (INA-PG) and an undergraduate degree in General Economics from the University of La Sorbonne in Paris, France. He is also a Certified Public Accountant (CPA) licensed in New York and a member of the American Institute of CPAs (AICPA).

Location

Shearman & Sterling LLP Conference Center
599 Lexington Avenue at 53rd Street
2nd Floor
New York, NY 10022

Nearby Hotels

Fifty NYC – an Affinia Hotel
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New York, NY 10022
Phone: 212-751-5710
0.1 miles away

Courtyard by Marriott New York Manhattan/Midtown East
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New York, NY 10022
Phone: 212-644-1300
0.1 miles away

DoubleTree by Hilton Hotel Metropolitan – New York City
569 Lexington Ave
New York, NY 10022
Phone: 212-752-7000
0.2 miles away

Hilton Garden Inn New York/Manhattan Midtown East
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Phone: 212-794-6000
0.1 miles away

Carvi Hotel New York
152 E 55th St
New York, NY 10022
Phone: 212-752-0600
0.2 miles away

 

Register

Please Note: Confirmed speakers do not need to register and are encouraged to participate in all sessions of the event. If you are a speaker and have any questions please contact our offices at 1.303.770.8800

EventEarly Bird Before
Friday, March 02, 2018
Standard RateAttendees
Power Project Acquisitions: Due Diligence and ValuationsUS $ 1295.00US $ 1495.00

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Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before February 23, 2018 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800