MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Solutions

100% COMMERCIAL & STRUCTURED

PROJECT FUNDING OPTIONS

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Talking Points Six years ago, the U.S. financial system faced challenges on a scale not seen since the Great Depression. The banks and financial markets, that American

families and businesses rely on to meet their everyday financing needs, were on the brink of failure. By October 2008, major financial institutions of all

sizes were threatened and many of them tried to shore up their balance sheets by shedding risky assets and hoarding cash. People were rapidly losing

trust and confidence in the stability of America’s financial system and the capacity of the government to contain the damage. Without immediate and

forceful action by Congress and the federal government, the U.S. economy faced the risk of falling into a second Great Depression.

• Project Capital Access

• Project Capital Resurgence

• Project Capital Stack Options

• Project Capital Bank Options

• Project Capital Action Items

THE WORST IS OVER, BUT CHALLENGES REMAIN…

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Access

While slowly improving, loan growth remained below average

during 2013. Loan growth remains centered in commercial loans,

with the larger banks reporting more consistent loan growth. The

median year-over-year loan growth rate for total loans was just over

4 percent for banks with assets more than $10 billion and 6 percent

for banks with assets between $1 billion and $10 billion. Banks with

total assets of less than $1 billion had a weaker 2 percent YOY loan

growth. In 2013, median loan growth rates for banks of all sizes

were well below their corresponding long-term growth averages

Take-away:

• Since 2008, many commercial and industrial (C&I) firms

have been precluded from project capital access.

• Heightened underwriting, reserve requirements and

regulatory compliance, have limited loan growth.

ACCESS IS IMPROVING AT LARGER BANKS…

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Resurgence

The financial performance of federally chartered institutions improved in 2013. The federal banking

system set a new record level of net income in 2013, but this took seven years and $1.5 trillion (or

20 percent) growth in assets to achieve, highlighting the slow pace of the recovery from the recent

financial crisis. This new nominal record was only $5 billion (5 percent) higher than the previous

record set before the financial crisis in 2006. Return on assets and return on equity remain below

pre-recession peaks. Overall, the federal banking system returned almost 10 percent on equity, but

small banks continue to lag behind larger ones. Revenue declined modestly as lower net interest

income more than offset modestly higher noninterest income. Sluggish loan growth and prolonged

low interest rates continue to weigh on net interest margins (NIM). The improvement in earnings still

comes largely from lower noninterest and provision expenses instead of organic growth.

Take-away:

• Given time, expansive monetary policy has enabled record income for federally

backed banks, while growth among smaller banks continues to lag.

• While improvement in underlying economic factors make resumption of structured

project finance and commercial lending possible, bank relationships are critical.

CREDIT IS AVAILABLE AGAIN,

BUT GARNERING A BANK’S

ATTENTION IS KEY…

Project Capital Resurgence

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

YOUR ACCESS TO CAPITAL DEPENDS UPON BANK RELATIONSHIPS

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Banking

Partner

Credit

Facility

Mezzanine

Fund

Project Capital Stack Options

Ideal for

2nd round

CAPEX or

for M&A ATM

Non-dilutive

Investment

Revolving

Project

LOC

Commercial

& Structured

Finance

IF YOU CAN’T WALK INTO A BANK

AND SECURE 100% OF PROJECT

FINANCING, WE CAN HELP.

Commercial & Structured Finance, Modified

Mezzanine Funding (MMF) Options

MMF Commercial LTV Model:

• A blended-mix of non-dilutive investment &

longer term debt, for 100% project financing.

• MMF funds replace equity, which reduces

project life-cycle cost of capital significantly.

• MMF enhancement of the project sponsor’s

balance sheet complements a bank’s LTV%.

MMF Structured Project Finance Model:

• 100% non-dilutive investment, refinanced after

12-months with a bank credit facility.

• MMF & bank debt cost of capital, amortized

over a 10-year project term, averages 12%.

• Without first-year P&I, deploying second round

funding is accretive to year-2 project valuation.

Project

Capital

Stack

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Bank Options

WE HAVE BOTH LIQUIDITY AND CREDIT FACILITY RELATIONSHIPS

FOR COMMERCIAL & INDUSTRIAL PROJECT CAPITAL.

MODIFIED MEZZANINE FUND INVESTMENT & BANKING PARTNER CREDIT FACILITIES

Project Capital Action Items

Bank lending is now more accessible as a result of:

• Federal monetary initiatives, economic recovery and

increased competition.

• Increased demand for cost-effective commercial and

industrial project financing.

• Third-party intermediaries that introduce bank and

non-bank funding relationships.

Take advantage of prevailing market trends by:

• Developing business relationships with banks,

strategic partners and GSEs.

• Evaluating the broader array of commercial and

investment bank funding options.

• Retaining financial advisors who can augment bank

and non-bank funding relationships.

Roy J. Tanner

APS Capital, LLC

Commercial & Structured Project Finance

Phone: 407.722.9135 | Skype: royjtanner

www.facebook.com/APSCapitalLLC

www.linkedin.com/in/rjtanner

www.allianceproserv.com

apscapital@gmail.com

Twitter: royjtanner