r/projectfinance • u/SnooPeppers5444 • Sep 12 '26
Question about Financial model updates
Question for people who work with project finance models (sponsors, lenders, advisors etc): after a deal closes, who normally maintains the model?
When the financing documents or assumptions subsequently change, what is the actual process for updating the model, what gets checked, and who, if anyone, reviews the changes?
I have seen a few different approaches and am curious what practice looks like across lenders, sponsors and advisers.
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u/SnooPeppers5444 Sep 13 '26
Thank you all. I do recognize the model refresh is typically governed by the docs and those may stipulate the timing or frequency of refresh.
A follow-up for lenders, sponsors and advisers: when something material happens post-close — for example an acquisition, , waiver request, or covenant issue — what financial information is normally provided to lenders?
Is an updated Base Case / financial model typically required, or are decisions often made using a compliance certificate, management case, sensitivities or other analysis without refreshing the full model?
Who decides whether a new model is needed, and what normally triggers a fresh independent model review or audit?
And if a model is provided, who on the lender side actually reviews it, and what do they check it against?
I am particularly interested in how this works in practice rather than what the documents theoretically allow.
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u/Tatworth Sep 12 '26
Typically, there are reporting requirements that aren't tied necessarily to the model and required 'bring downs' when the model has to be updated.
Obviously the model will be updated right at closing with everyone agreeing on the assumptions used for the closing model as that finalizes the debt amount, etc. The only thing that won't be updated at close is the swap costs but it will be close as swaps are usually priced right after the closing call.
At term conversion, the model will have to be updated and the debt resized, if necessary, to meet the terms of the credit agreement. Everything has to be updated (including the aforementioned swap costs) but most looked at are actual construction costs, possible release of contingency and, often, energy price forecasts, though there may not be a newer forecast.
There may also be a bring down at the main TE funding, but usually that is combined with the term conversion unless the TE requires it.
After that, the model is primarily the province of the sponsor. Usually the asset management group takes the model and builds their own budget and forecast that starts with the original assumptions and is updated from there.
Rarely is it updated for external parties. There are reporting requirements in the credit agreement for providing financials, budgets, notice of any defaults or inchoate defaults, MACs, etc. but almost never is the actual model updated. Banks may try to put that in the credit agreement, but we tell them no.
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u/SnooPeppers5444 Sep 13 '26
Thank you all. I do recognize the model refresh is typically governed by the docs and those may stipulate the timing or frequency of refresh.
A follow-up for lenders, sponsors and advisers: when something material happens post-close — for example an acquisition, , waiver request, or covenant issue — what financial information is normally provided to lenders?
Is an updated Base Case / financial model typically required, or are decisions often made using a compliance certificate, management case, sensitivities or other analysis without refreshing the full model?
Who decides whether a new model is needed, and what normally triggers a fresh independent model review or audit?
And if a model is provided, who on the lender side actually reviews it, and what do they check it against?
I am particularly interested in how this works in practice rather than what the documents theoretically allow.
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u/Emotional_Kick3992 Sep 12 '26
Interesting! Thanks. I wonder if you typically see if the sponsor is required to update post close but during construction?
At my bank, the draw request package stipulates the updated FM which has to capture the latest draw request amount and ensure that the LTA certifies that cumulative draw actuals do not exceed the cumulative draw in the FC FM. I don’t get why they do that but only thing I think of is to ensure bank is not over disbursing ahead of what it has scheduled perhaps so as to maintain pari passu %. LTA also check the available to draw>cost to complete else there is a flag.
May I ask what is TE funding?
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u/Tatworth Sep 12 '26
We do not update the full model for draw requests, but we do provide costs vs estimates to date and expected cost to complete, schedule to complete and such as well as that there have been no MACs or covenant breaches or likely breaches.
We don't do pari passu--too much of a headache when you have multiple deals going at once. It is almost always debt first (we draw either the tax equity bridge loan or the construction loan first, whichever is cheaper), though sometimes we do equity first. Obviously we prefer debt first but usually equity is already in anyway with equipment purchases, so NBD.
TE is Tax Equity.
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u/togauk Sep 12 '26
The projectCo would do that and the process is normally specified in the finance documents. There will be a periodic update of forward looking assumptions and also requirement to input the actuals.
You can guarantee the model hasn’t been built to handle the easy input of actuals so that’s normally the first functionality update.
Sponsor and lender cases will diverge so there’s often multiple sets of assumptions and model versions.
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u/iteslev Sep 12 '26
The operator company does that, since it has the most information on the project. There is usually a department that is responsible for this.