Project Finance


What is the Project Finance

The project finance is the financing operation of a specific economic undertaking realized through an ad hoc company whose cash flow originating from running it constitutes the primary source for the coverage of the financing costs.
The term project finance implies the financing of a single entrepreneurial project of which the
investors consider the credit worthiness on the basis of the cash flow originated during the running stage of the project and not on the financial reliability of the investors (i.e. the subjects
realizing and managing the project).
The specific features of a project finance can be better described by the following elements:

  • Self-sustaining. The capacity of the project to generate a cash flow sufficient to cover the investment and the running costs and return the servicing costs of due loan giving a project to the invested capital.
  • Ring fence. The legal and capital separation between the project and its investors by way of an ad hoc company called project company with the aim at separating the cash flow and the project assets from the other entrepreneurial activities of the investors.
  • First sharing. The precise allotment of the project risks among various subjects involved in the enterprise, that is the allotment of the project risks to those subjects who can rely on their capability to implement them in the best and most effective way.

The Chiavari project

The project consists in the construction of, and running, the expansion of the Chiavari marina
harbour by lengthening the breakwater quay and completion of the inner quay, construction of new mooring piers and creation of new boat berths and car bays. In detail there are going to be 151 further car spaces, of which 80 are garages and 187 car bays.
The legal agreement with the Chiavari Council provides the right of the Tigullio Shipping project company to exploit the realized works for a period of 40 years (financially at date the expiry is 28 June 2051), besides the running of the haulages of the whole harbour. The harbour expansion started in the month of August 2011.

The advantages

The advantages are not only represented by the possibility to intervene where the Council would not have the resources to do it especially in this period of time with the need to reduce public expenditure, but also by another not least important element, i,e. the overseeing of a public administration on the overall project.
This overseeing, which is also a guarantee of correct completion of the works for public usage and yachtsmen, is clear especially in the initial stage of the project when the Council is in charge of verifying the basic conditions of the economic financial investment and its management. To this purpose an economic financial plan is arranged which focuses, besides the amount of investments representing the value of the works, also on the cash flow generated by the project and the proof that the investments balance the expenditures for the construction and the running of the harbour.
A further element of guarantee is the presence of a financial institution (for Chiavari Marina a bank specialized in financing infrastructural works) certifying the financial feasilility of the project and acting as a ‘lender’, that is a subject called to cover the finances needed by the investment. In the specific case of the expansion of the Chiavari harbour the capital invested by private people (bank and shareholders of the project company) will cover the whole amount of the investment exceeding, as already said, € 30 mil. In particular the project is organized in a way that the investment of the partners of Tigullio Shipping amounts to about a quarter of the total invested capital while the remaining part comes from loans granted by an investment bank besides the self financing from the running returns of the harbour.
The capital paid by the partners and the financial institution is registered in the name of the project company Tigullio Shipping S.p.A. They act as legal agents distinct from the partners’ companies. In this way there is a clear demarcation of the cash flow generated by the project from that generated by other activities of the investors (the ‘ring fence’ system) giving way to a more streamlined organization framework with more risk effective conditions of management.
To conclude the project financing used for the expansion works of the Chiavari harbour represents the best tool to guarantee a rapid completion of a complicated and costly structure in a context prioritizing the public needs and safeguarding the interests of theprivate as final users of the harbour services.


Main actors of the project:

Private investors

The companies which have established the project company Tigullio ShippingS.p.A. together with minority partners and are therefore in charge of the project stage, financing and construction of the expansion works of the marina harbour through the establishment of A.T.I.


Tigullio Shipping Project Company

It was established by the partners for the realization of the construction and for the management of the 40-year concession as authorized by Chiavari Council. The company capital amounts to € 4,225,000 and will be invested in the construction together with the other financing sources coming from the bank loan.


The Council

They authorize the construction, oversee it and are guarantors of the legal technical
environmental and landscaping qualifications as well as the financial feasibility of the
project. At the expiry of the concession all works realized and all rights of financial
returns will go to the Chiavari Council for public use without the need of further financial


Financial Institution

The bank assisting the investors in the promotion of the project identifies the best economic and financial proposition, supports the investors in drawing an economic and financial plan calculating the cash flow necessary to guarantee the reimbursement of the invested capital and finally acts as a tender station financing the operation.