About the Position

LPO is seeking an advisor to assist in evaluating loan requests. They will advise on market, financial, and regulatory aspects of underwriting, structuring, negotiating, and closing of loan transactions.

• Provide expert, independent opinions on whether the Project’s proposed business plans are viable and achievable. 
• Review the sponsor’s business plan and financial model(s) and develop an independent credit risk assessment of the overall transaction.
• Closely collaborate with DOE staff and its appointed advisors, and sponsor’s financial, technical, and other advisors, to verify inputs into analytical efforts.
• Advisement will be required from inception of the due diligence process, through commercial and term sheet negotiations and up to and including financial close and disbursement of funds and a period of monitoring post financial close that may last 12 or 18 months.
• Offer expert professional judgment on the Project’s pro-forma business/financial expectations, including the underlying financial/business/commercial assumptions, are feasible and achievable given past, current and expected future prices, cost parameters, and market demand.

Responsibilities

Review and analyze the automotive market and specific market segment in which the Project plans to operate. Analysis includes sustainable competitiveness, barriers to entry and the threat of substitute products/technology. The market review shall include the following:

Inputs Review: Describe the relevant Project input markets and assess the Project’s strategy for securing adequate supply in terms of:

• Price assessment – methodology, incentive pricing, long-term forecast
• Market assessment – supply and demand, current and future cost curves, typical contract basis
• Market size and long-term supply/demand forecasts
• Green/brownfield project/[start-up] manufacturer assessment

Output Review: Describe the relevant Project output market, specifically:

• Industry structure and supply chain overview
• Price assessment – basis of current market pricing, long-term forecast
• Cost profile (comparison of costs vs. competitors, future operations)
• Market assessment – current and long-term supply and demand forecasts
• Product assessment (product quality, positioning of product within market against competitors etc.)
• Overview of strengths and weaknesses versus expected North American and global production pipeline
• Substitution risks
• Review and analyze major industry participants and their competitive position (including market share)
• Marketing strategy assessment
• Technology / substitution risks

Price Forecasts: Develop and report on lender base case price forecasts for key inputs and outputs and report on the basis for these forecasts. Propose business/market sensitivity cases for lender model. Develop price forecasts for the selected sensitivity cases and expound on the basis for these forecasts. Incorporate base case and sensitivity prices into the lender model.

Financial Advisory Responsibilities

• Validate the financial model: Ensure the financial model functions correctly, matches any project contracts (e.g., construction, suppliers, offtake), and makes reasonable input assumptions consistent with industry norms (e.g., costs, prices, sales, ratios, etc.). Work with DOE (and its Advisors) and Sponsor to correct/improve/maintain the financial model throughout due diligence. Periodically summarize key model outputs for DOE (e.g., coverage ratios, reserve accounts, equity returns).
• Build lender base case model: Update the Sponsor’s financial model with lender base case terms and assumptions. Work with DOE (and its other Advisors) to identify and test lender base case terms and assumptions.
• Build and run stress cases: Work with DOE (and its other Advisors) to model stress cases that test Project cash flow resiliency to changes in key variables (e.g., input/output prices, sales volume, technology performance, etc.).
• Run the model: Support DOE with financial model runs, updates, and recommendations during due diligence, term sheet negotiation, and loan documentation and closing.
• Report on model results: Produce report(s) and charts that educate and advise DOE on financial model outputs (e.g., amortization profiles, base, and sensitivity case coverage ratios, etc.).

Business Plan and Contracts

• Review the business plan: Determine whether the business plan is financially reasonable and accurately reflected in the financial model.
• Confirm financial data: Verify that financial data, forecasts, and assumptions in the business plan match key contract terms and/or use reasonable assumptions. Analyze the financial strength of the Sponsor.
• Review finance structure: Evaluate the Project’s financial structure, considering leverage, tenor, ratios, accounts, letters of credit, insurance coverage, etc. Evaluate how this structure compares with industry norms.
• Review contracts: Review financial and commercial elements/structures of contracts (e.g., EPC, inputs, offtake, O&M, letters of credit) and confirm they are correct in the financial model and business plan. Confirm these contracts are reasonable and consistent with industry norms. Analyze creditworthiness of key contract counterparties.
• Project viability: Provide recommendations regarding the viability of the proposed project.

Metrics, Risks and Mitigants

• Identify financial risks: Identify and assess financial risks in the Project business plan, financial projections, contract, etc.
• Recommend mitigants: Propose mitigants to identify financial risks.
• Recommend metrics: In collaboration with DOE staff and other advisors, recommend financial and technical metrics to be used as conditions precedent for the future release of collateral.

Negotiations and Approval

• Loan negotiations: Assist DOE by evaluating financial impacts of terms under negotiation and recommending terms that reduce lender risk.
• Financial model lock: Work with DOE and Sponsor to incorporate negotiated terms into the model so it can be locked in for approval.
• Credit approval package: Assist DOE with preparation and review of credit memoranda, investment memos, risk and recovery matrices, presentation materials and DOE and inter- agency approval documents.
• Loan Terms: If requested, evaluate the business impacts of proposed loan terms. Compare terms to industry norms. Recommend terms that reduce lender risk.

Financial Close

• Loan documentation: Review financial terms in loan documents and confirm they are consistent with the term sheet, financial model, contracts, etc. Advise DOE on financial negotiations during loan documentation.
• Financial model: Update the financial model with changes to negotiated terms, revised assumptions (e.g., commodity prices, technical performance, etc.), and any other necessary adjustments. Advise DOE on the impacts of these changes on the Project’s financial performance. Lock the model for financial close.
• Bring down report(s): DOE may ask the Advisor to update one or more of the Advisor reports in Work Areas Such a request may be made for reasons such as significant passage of time, major market changes, and/or changes in deal terms between Conditional Commitment and Financial Close.

Monitoring Phase

Upon DOE request, and for a period of 12 months following Financial Close, the Financial Advisor shall complete the following tasks:

• • Financial Model: Support DOE in adapting the base case financial model for use as a monitoring model to support initial disbursements of each tranche. Support, on an as-needed basis, DOE’s analysis using the financial model to produce updated base case and sensitivity scenarios.
  • Business Plan and Contracts: Review financial and commercial contract terms for reasonableness and consistency with industry norms. Provide support to DOE during the negotiation of new agreements with the Borrower.
  • Negotiations and Contracts: Assist DOE by evaluating new financial impacts of terms under negotiation and recommending terms that reduce lender risk. Work with DOE to incorporate new negotiated terms into model, prepare revised sensitivity analysis and review as necessary.
  • Ongoing Monitoring: Advise DOE on financial negotiations with new or modified contracts that may occur during monitoring. DOE may ask the Advisor to update one or more of the Advisor reports.

Qualifications 

• • Advisor should have extensive experience advising lenders on senior debt and commercial transactions (including due diligence, underwriting, structuring, negotiating, and closing) and in supporting due diligence efforts on behalf of equity investors or commercial lenders.
  • Experience conducting assessment and produce reports which identify potential market risks that may affect the repayment of the proposed loan and propose recommendations.
  • Relevant experience in performing independent evaluations of business plans and commercial feasibility of projects, vis-à-vis underlying market parameters, in connection with financing of projects, particularly on a project financing basis.