Method and cash trust for financing and operating a business project

• US 20060064366A1
• Filed: 09/21/2004
• Published: 03/23/2006
• Est. Priority Date: 09/21/2004
• Status: Abandoned Application

• Current Assignee: Neptune Development LLC
• Original Assignee: Neptune Development LLC
• Inventors: Smith, Steven E.
• Application Number:
  US10/945,815
• Publication Number:
  US 20060064366A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: Y02P 90/90 Financial instruments for climate change mitigation, e.g. environmental taxes, subsidies or financing
• CPC Class Codes: Y04S 10/50 Systems or methods supporting the power network operation or management, involving a certain degree of interaction with the load-side end user applications

Abstract

A method and financial arrangement for financing (or refinancing) and operating a business project are provided. They are designed to better allocate the risks inherent in setting up and operating the business project and optimize the benefits of the project for all of the involved parties—lenders, sponsors, investors, operators and consumers and/or end users of the project. This novel method and financial arrangement provide additional security for lenders and investors of the project, while, at the same time, providing benefits and incentives to consumers and/or end users of the project. As an illustrative example, an embodiment of the present invention is applied to a power plant project. Among many potential benefits, the present invention may provide a solution for overcoming the current disarray in the power industry.

Claims

1. A method for financing and operating a power plant project with a cash trust comprising the steps of:

obtaining funds for financing said power plant project;

allocating at least a portion of said funds in a pre-funded component of said cash trust;

maintaining reserves in an operating component of said cash trust;

allocating a portion of said reserves for meeting a portion of debt obligation incurred in connection with said step of obtaining funds for financing said power plant project; and

designating at least a portion of a remaining balance of said operating component as financial benefits to be provided to customers of said power plant project.

2. The method of claim 1, further comprising the step of financing said pre-funded component during initial financing stage of said power plant project.

3. The method of claim 1, wherein said reserves comprise at least a portion of net cash flow generated by said power plant project.

4. The method of claim 1, further comprising the step of issuing at least one financial instruments which comprises a contractual right to a purchase a designated amount of electrical energy from said power plant project and a contractual right to obtain said financial benefits associated with said purchase.

5. The method of claim 4, wherein said financial instrument further comprises a bond.

6. The method of claim 4, wherein said financial instrument is transferable.

7. The method of claim 4, wherein said financial benefits are rebates.

8. The method of claim 1, wherein said pre-funded component is financed with debt.

9. The method of claim 8, wherein said debt comprises proceeds from sale of bonds.

10. The method of claim 1, further comprising the step of maintaining said pre-funded component separately from said funds for financing said power plant project.

11. The method of claim 1, wherein said step of allocating a portion of said reserves for meeting a portion of debt obligation is only performed until a balance of said reserves in said reserve account and said debt obligation reaches a predetermined level.

12. The method of claim 1, wherein said financial benefits are rebates.

13. The method of claim 1, wherein said step of maintaining at least a portion of remaining balance comprises the step of investing said at least a portion of remaining balance.

14. The method of claim 1, wherein said power plant project comprises operation of a natural-gas based combustion power plant.

15. The method of claim 1, wherein said power plant project comprises operation of a nuclear power plant.

16. The method of claim 5, wherein said bond is a non-recourse tax-exempt municipal bond.

17. The method of claim 1, wherein said power plant project involves a new power plant.

18. The method of claim 1, wherein said power plant project involves an existing power plant.

19. The method of claim 18, wherein said existing power plant is financially distressed and is refinanced in accordance with said method.

20. The method of claim 1, wherein said step of obtaining funds for financing comprises the step of issuing financial instruments, wherein each of said financial instruments comprises a contractual right to receive a designated amount of electrical energy from said power plant project in exchange for an investment in said power plant project and a contractual right to obtain said financial benefits associated with said designated amount of electrical energy.

91. The method of claim 1, wherein said pre-funded component is phased out during operational stage of said power plant project.

97. The method of claim 1, wherein said cash trust further comprises a cash trap escrow account.

21. A cash trust for financing and operating a power plant project comprising:

funds for financing said power plant project;

a pre-funded component financed by at least a portion of said funds; and

an operating component for maintaining reserves, wherein a portion of said reserves is allocated for meeting a portion of debt obligation incurred in connection with obtaining said funds for financing said power plant project and at least a portion of a remaining balance of said operating component is allocated as financial benefits to be provided to customers of said power plant project.

22. The cash trust of claim 21, wherein said pre-funded component is financed during initial financing stage of said power plant project.

23. The cash trust of claim 21, wherein said reserves comprise at least a portion of net cash flow generated by said power plant project.

24. The cash trust of claim 21, wherein said funds comprise proceeds from issuance of at least one financial instrument which comprises a contractual right to purchase a designated amount of power from said power plant project and a contractual right to obtain said financial benefits associated with said purchase.

25. The cash trust of claim 24, wherein said financial instrument further comprises a bond.

26. The cash trust of claim 24, wherein said financial instrument is transferable.

27. The cash trust of claim 24, wherein said financial benefits are rebates.

28. The cash trust of claim 21, wherein said pre-funded component is financed with debt.

29. The cash trust of claim 28, wherein said debt comprises proceeds from sale of bonds.

30. The cash trust of claim 21, wherein said pre-funded component is maintained separately from said funds for financing said power plant project.

31. The cash trust of claim 21, wherein a portion of said reserves is allocated for meeting at least a portion of said debt obligation until a balance of said reserves in said operating component and said debt obligation reaches a predetermined level.

32. The cash trust of claim 21, wherein said financial benefits are rebates.

33. The cash trust of claim 21, wherein said at least a portion of remaining balance of said operating component is invested.

34. The cash trust of claim 21, wherein said power plant project comprises operation of a natural-gas based combustion power plant.

35. The cash trust of claim 21, wherein said power plant project comprises operation of a nuclear power plant.

36. The cash trust of claim 25, wherein said bond is a non-recourse tax-exempt municipal bond.

37. The cash trust of claim 21, wherein said power plant project involves a new power plant.

38. The cash trust of claim 21, wherein said power plant project involves an existing power plant.

39. The cash trust of claim 38, wherein said existing power plant is financially distressed and is refinanced in accordance with said financing arrangement.

40. The cash trust of claim 21, wherein said funds comprise proceeds from issuance of financial instruments, wherein each of said financial instruments comprises a contractual right to receive a designated amount of electrical energy from said power plant project in exchange for an investment in said power plant project and a contractual right to obtain said financial benefits associated with said designated amount of electrical energy.

92. The cash trust of claim 21, wherein said pre-funded component is phased out during operational stage of said power plant project.

98. The cash trust of claim 21, wherein said cash trust further comprises a cash trap escrow account.

41. A financial instrument for financing a power plant project comprising:

a contractual right to purchase a designated amount of electrical energy from said power plant project; and

a contractual right to obtain financial benefits associated with said designated amount of electrical energy from said power plant project, wherein said financial benefits vest when said power plant project satisfies a predetermined portion of its debt obligation.

42. The financial instrument of claim 41, wherein said financial benefits are provided from a cash trust maintained by said power plant project and said cash trust comprises a pre-funded component and an operating component.

43. The financial instrument of claim 42, wherein said operating component is financed by at least a portion of cash flow generated by said power plant.

44. The financial instrument of claim 42, wherein said pre-funded component is financed during initial financing stage of said power plant project.

45. The financial instrument of claim 41, wherein at least one of said contractual right to purchase and said contractual right to obtain financial benefits is transferable.

46. The financial instrument of claim 41, further comprising a security.

47. The financial instrument of claim 46, wherein said security is a bond.

48. The financial instrument of claim 41, wherein said financial benefits are rebates.

93. The financial instrument of claim 42, wherein said pre-funded component is phased out during operational stage of said power plant project.

99. The financial instrument of claim 42, wherein said cash trust further comprises a cash trap escrow account.

49. A method for financing and operating a business project with a cash trust, comprising the steps of:

obtaining funds for financing said business project;

allocating at least a portion of said funds in a pre-funded component of said cash trust;

maintaining reserves in an operating component of said cash trust;

allocating a portion of said reserves for meeting a portion of debt obligation incurred in connection with said step of obtaining funds for financing said business project; and

designating at least a portion of a remaining balance of said operating component as financial benefits to be provided to customers of said business project.

50. The method of claim 49, further comprising the step of financing said pre-funded component during initial financing stage of said power plant project.

51. The method of claim 49, wherein said reserves comprise at least a portion of net cash flow generated by said business project.

52. The method of claim 49, further comprising the step of issuing at least one financial instrument which comprises a contractual right to purchase from said business project and a contractual right to obtain said financial benefits associated with said purchase.

53. The method of claim 52, wherein said financial instrument further comprises a bond.

54. The method of claim 52, wherein said financial instrument is transferable.

55. The method of claim 52, wherein said financial benefits are rebates.

56. The method of claim 49, wherein said pre-funded component is financed with debt.

57. The method of claim 56, wherein said debt comprises proceeds from sale of bonds.

58. The method of claim 49, further comprising the step of maintaining said pre-funded component separately from said funds for financing said business project.

59. The method of claim 49, wherein said step of allocating a portion of said reserves for meeting a portion of debt obligation is only performed until a balance of said reserves in said operating component and said debt obligation reaches a predetermined level.

60. The method of claim 49, wherein said financial benefits are rebates.

61. The method of claim 49, wherein said step of maintaining at least a portion of remaining balance comprises the step of investing said at least a portion of remaining balance.

62. The method of claim 53, wherein said bond is a non-recourse tax-exempt municipal bond.

63. The method of claim 49, wherein said business project involves a new business.

64. The method of claim 49, wherein said business project involves an existing business.

65. The method of claim 64, wherein said existing business is financially distressed and is refinanced in accordance with said method.

94. The method of claim 49, wherein said pre-funded component is phased out during operational stage of said business project.

100. The method of claim 49, wherein said cash trust further comprises a cash trap escrow account.

66. A cash trust for financing and operating a business project comprising:

funds for financing said business project;

a pre-funded component financed by at least a portion of said funds; and

an operating component for maintaining reserves, wherein a portion of said reserves is allocated for meeting a portion of debt obligation incurred in connection with obtaining said funds for financing said business project and at least a portion of remaining balance of said operating component is allocated as financial benefits to be provided to customers of said business project.

67. The cash trust of claim 66, wherein said pre-funded component is financed during initial financing stage of said business project.

68. The cash trust of claim 66, wherein said reserves comprise at least a portion of net cash flow generated by said business project.

69. The cash trust of claim 66, wherein said funds comprise proceeds from issuance of at least one financial instrument which comprises a contractual right to purchase from said business project and a contractual right to obtain said financial benefits associated with said purchase.

70. The cash trust of claim 69, wherein said financial instrument further comprises a bond.

71. The cash trust of claim 69, wherein said financial instrument is transferable.

72. The cash trust of claim 69, wherein said financial benefits are rebates.

73. The cash trust of claim 66, wherein said pre-funded component is financed with debt.

74. The cash trust of claim 73, wherein said debt comprises proceeds from sale of bonds.

75. The cash trust of claim 66, wherein said pre-funded component is maintained separately from said funds for financing said business project.

76. The cash trust of claim 66, wherein said portion of said reserves is allocated for meeting said portion of said debt obligation until a balance of said reserves in said operating component and said debt obligation reaches a predetermined level.

77. The cash trust of claim 66, wherein said financial benefits are rebates.

78. The cash trust of claim 66, wherein said at least a portion of remaining balance of said operating component is invested.

79. The cash trust of claim 70, wherein said bond is a non-recourse tax-exempt municipal bond.

80. The cash trust of claim 66, wherein said business project involves a new business.

81. The cash trust of claim 66, wherein said business project involves an existing business.

82. The cash trust of claim 81, wherein said existing business is financially distressed and is refinanced in accordance with said method.

95. The cash trust of claim 66, wherein said pre-funded component is phased out during operational stage of said business project.

101. The cash trust of claim 66, wherein said cash trust further comprises a cash trap escrow account.

83. A financial instrument for financing a business project comprising:

a contractual right to purchase a service or product from said business project; and

a contractual right to obtain financial benefits associated with said purchase, wherein said financial benefits vest when said business project satisfies a predetermined portion of its debt obligation.

84. The financial instrument of claim 83, wherein said financial benefits are provided from a cash trust maintained by said business project and said cash trust comprises a pre-funded component and an operating component.

85. The financial instrument of claim 84, wherein said operating component is financed by at least a portion of cash flow generated by said business project.

86. The financial instrument of claim 84, wherein said pre-funded component is financed during initial financing stage of said business project.

87. The financial instrument of claim 83, wherein at least one of said contractual right to purchase and said contractual right to obtain financial benefits is transferable.

88. The financial instrument of claim 83, further comprising a security.

89. The financial instrument of claim 88, wherein said security is a bond.

90. The financial instrument of claim 83, wherein said financial benefits are rebates.

96. The financial instrument of claim 84, wherein said pre-funded component is phased out during operational stage of said business project.

102. The financial instrument of claim 84, wherein said cash trust further comprises a cash trap escrow account.