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The Ras Laffan Liquefied Natural Gas Co. Ltd. was formed to exploit natural gas fields in Qatar. It was a joint venture among Mobil Corp., (26.5 per cent ownership interest), Qatar General Petroleum Corp. (QGPC) (66.5 per cent) and two Japanese corporations: Nissho Iwai (three per cent) and Itochu (four percent). Ras Lafan wanted to sell two series of project finance bonds with $400 million maturing in 2006 carrying a coupon of 7.6 per cent, and $800 million maturing in 2014 with an interest rate of around 8.3%. Now the question is why Broadway should invest in the Rass laffan project finance, Non-recourse bonds. Stterthwaite began reviewing the risk inherent in the project and notes on how each risk was being handled so as to satisfy bondholders. Here, in this report we have conducted the economic analysis of Qatar,PESTEL anlysis, Porters Five Forces analysis for LNG Industry.We ahve also analyse the internal and external strength and weakness (Swot) analysis. This project involes different types of risk. These are Foreign Exchange Risk, Reliance on Single Customer, Energy Commodity Price, Construction Risk, Credit Risk/ Default Risk etc. Ras Laffan takes different measures to mitigate these risk. Some of the measures are Long term Supply-Purchase Agreement, well control insurance during the drilling phase, construction risk insurance, operating insurance and $200 million business interruption insurance. There are also guarantee from the sponsors to repay the lenders if project was not completed on schedule and as designed. Project has been evaluated using NPV and IRR method under three different scenarios. Three scenarios are Base Case, Worst Case, And Best Case Scenario. In worst case scenario, the project gives negative NPV and lower IRR than required rate of return. Both in the Base Case and Best Case, NPVs are positive and IRR is high. Therefore it can be recommendated that Broadway should invest in the bond in the Rass laffan project finance, Non-recourse bonds. It should invest both in $400 million maturing in 2006 carrying a coupon of 7.6 per cent, and $800 million maturing in 2014 with an interest rate of around 8.3%.
Case overview
The Ras Laffan Liquefied Natural Gas Co. Ltd. was formed to exploit natural gas fields in Qatar. Ras
Laffan Liquefied Natural Gas Company Limited (RasGas), Qatars second LNG company, was established by Emiri decree in 1993 as an incorporated joint ventur ebetween Qatar General Petroleum Corporation (QGPC) and Mobil Corporation. On September 13, 1997, the founding shareholders were joined by Itochu Corporation and Nissho Iwai Corporation of Japan. Discussions are currently ongoing to include a Koreanentity as a further shareholder The government of the State of Qatar has granted RasGas the right to drill for and produce natural gas within a specified location in Qatars principal gas field (the NorthField) and to sell a specified quantity of LNG and additional quantities of related hydrocarbon products for a period of not less than 25 years. The $3.5 billion RasGas project is well underway. Two drilling rigs are currently working on a 15 well program and the construction of the offshore facilities and the onshore plant is on schedule and within budget. This is largely due to the success of the contracting strategy and project financing, which were innovative and introduced new concepts in the LNG industry. The RasGas partnership is strong, combining host country commitment, technical expertise, project management and financing skills and marketing presence in the two principal established world markets for LNG (Japan and Korea). Of the 3.35 billion in funds to be raised externally in the estimated project budget, $1 billion consisted of equity contribution from Mobil and the state of qatar, another $1.15 billion in loan commitment which secured from Export Credit Agencies and commercial banks.
QGPC
QGPC is wholly owned by the State of Qatar and operates in all sectors of the countrys oil and gas industry. It has responsibility for exploration, drilling, production, marketing, refining, transport and storage of oil and gas, their derivatives and by-products. In addition, QGPC has joint ventures with industries engaged in manufacturing and marketing of petrochemicals and fertilizers. QGPC is also the majority shareholder in the Qatargas LNG project, with a 65% interest. Mobil Corporation Mobil is one of the worlds largest integrated international oil and gas companies. Mobil has over 20 years experience in every phase of the LNG business and is the second largest producer and marketer of condensate in the world. Mobil also holds a 10% interest in the Qatargas LNG project. Korea Gas Corporation (KOGAS) KOGAS was the sole customer for Rass Laffans output. It would purchase LNG under a 25 year SPA, with LNG deliveries beginning in August 1999. KOGAS is owned 50% by the Republic of Korea, 34.7% by the state owned Korea Electric Power Corporation and 15.3% by regional Korean governments. KOGAS has been importing LNG since 1986 and is currently the sole importer of LNG into Korea. Supply & Purchase Agreement includes: LNG prices linked to JCC index 4.8 million metric tons of LNG annually A take-or-pay clause
Estimated start price: $3.88 per MMBTU Kogas responsible for transportation of LNG Qatari Government has provided 12 year tax holiday to the Ras Laffan project.Mobil corporation has agreed to provide $200 million fund for debt servicing shortfalls On June 30, 1997 RasGas and KOGAS agreed to an amendment to the SPA entered into in 1995, thereby doubling the annual quantity of LNG to be delivered from 2.4MMTA to 4.8MMTA. Contractual deliveries will commence in July 1999. The contract term runs until 2024, with an option to extend beyond this.RasGas drilled and tested a delineation well in 1994, the results of which verified gas quality, well deliverability and gas reserves to support a minimum of 2 trains of LNG production for 25 years. The Ras Laffan project was expected to take five years to construct, drawing on some of the worlds major LNG contractors. Major portions of the LNG facility would be constructed at sub contractor sites around the world, with co-ordination among the drilling and construction consortium being essential.LNG processing will consist of the following steps-
Furthermore, a number of Reservoir and Completion studies were completed tosupport the most optimum development plan for the RasGas concession area, the development plan which calls for the drilling of 15 wells from 3 Wellhead Platforms will: 1. Meet gas demand for at least the next 25 years without compression. 2. Ensure prudent reservoir management of the gas reserves. 3. Provide safe, reliable, cost effective and mechanically sound completions. Drilling operations from 2 rigs commenced in April 1997.
There was an intercreditor protection Agreements which covered some clauses like Minimum equity levels Approval of new SPAs Issuance of additional debt. Restriction on asset sates exceeding $30 million in a year Restriction on issuance of new equity with minimum ownership levels for each of the two current sponsors. As construction on the project continued, Rass laffan and its investment bankers sought to launch project finance bonds which will be sold without recourse to the parents companies. QGPC and Mobil felt comfortable with leverage consisting of 70% debt and 30% equity if the project was expanded to two trains and Kogas doubled its LNG purchases. Now Rass Lafan considered to sell two series of project finance bonds with $400 million maturing in 2006 carrying a coupon of 7.6 per cent, and $800 million maturing in 2014 with an interest rate of around 8.3%. Now the question is why Broadway should invest in the Rass laffan project finance, Non-recourse bonds. Stterthwaite began reviewing the risk inherent in the project and notes on how each risk was being handled so as to satisfy bondholders.
Government Stability Socioeconomic Conditions Investment Profile Internal Conflict External Conflict Corruption Military in Politics Religious Tensions Law and Order Ethnic Tensions Democratic Accountability Bureaucracy Quality Total 100
12 12 12 12 12 6 6 6 6 6 6 4 100
Government Stability
This is an assessment both of the governments ability to carry out its declared program(s), and its ability to stay in office. The risk rating assigned is the sum of three subcomponents, each with a maximum score of four points and a minimum score of 0 points. A score of 4 points equates to Very Low Risk and a score of 0 points to Very High Risk.
Legislative strength
While the Emir does have full power to rule the country there is a consultative assembly. Their role is mainly to act as advisors to the Emir and they are appointed by him. That being said they do have some ability to check the powers of the Emir by ensuring that he does not enact legislation that is too unpopular. While far from being the same as having a democratic assembly it has done a fairly good job of ensuring that the rule of the Emir respects the rights of the citizens. Qatar has a well established code of laws and trials are generally thought to be fair. The country is ruled by Islamic law so things are more strict than most Westerners are used to but not nearly as strict as you would find in other countries in the Middle East. It indicates that the country is low risky and the assigned point is 3.
Popular Support
Qatar has been ruled by the Al Thani family since the mid-1800s, Qatar transformed itself from a poor British protectorate noted mainly for pearling into an independent state with significant oil and natural gas revenues. During the late 1980s and early 1990s, the Qatari economy was crippled by a continuous siphoning off of petroleum revenues by the amir who had ruled the country since 1972. He was overthrown by his son, the current Amir HAMAD bin Khalifa Al Thani, in a bloodless coup in 1995 The summery of the Government stability rating are giving below:
Government stability:
Score 2 3 2
Total
Maximum 4 4 4 7
Total
12
Socioeconomic conditions
This is an assessment of the socioeconomic pressures at work in society that could constrain government action or fuel social dissatisfaction. The risk rating assigned is the sum of three subcomponents, each with a maximum score of four points and a minimum score of 0 points. A score of 4 points equates to Very Low Risk and a score of 0 points to Very High Risk. The subcomponents are:
Unemployment
The unemployment rate measures the number of people actively looking for a job as a percentage of the labor force. Unemployment rate in Qatar 2.7% Which indicates moderate level of risk . Thats why 2 points has been assigned for this.
Consumer Confidence
Qatars oil exports led to a high standard of living, with per capita incomes averaging $13,000, surpassed only by Kuwait and the United Arab Emirates. Thats why consumer confidence in Qatar was high. So 3 points has been assigned for this.
Poverty
Petroleum is the cornerstone of Qatar's economy and accounts for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings. Oil has given Qatar a per capita GDP that ranks among the highest in the world. Qatars oil exports led to a high standard of living and its poverty rate is almost zero. Thats why we have assigned 3 points for this. The summery of Socioeconomic conditions rating are provided below:
Socio-economic condition:
Score 2 3 3
Total
Maximum 4 4 4 9
Total
12
Investment profile:
Qatar is the wealthiest country in the world in per capita terms with substantial oil and gas reserves, an excellent infrastructure system and free market economic policies. Qatar's economy has been growing by around 7.6% per year in recent years. The Foreign Investment Law has also played an important role in stimulating economic growth. The law permitted up to 100% foreign ownership for the first time in the sectors of agriculture, manufacturing, health, education, and tourism. It also offered investors a number of substantial incentives, including the freedom to repatriate all profits to the investors country of origin.
Investment profile: Contract viability Profit repotration Payment delays Total 3 4 3 10 4 4 4 12
Internal Conflict
This is an assessment of political violence in the country and its actual or potential impact on governance. There was always a possibility that events such as civil strife, war, natural disasters, labor unrest and similar events could affect the production and shipment of oil and LNG. The risk rating assigned is the sum of three subcomponents considering these issue. The subcomponents are: Civil War/Coup Threat
External Conflict
Qatar had larger and sometimes aggressive neighbors. Qatar could be affected by forces outside its control, in what was sometimes described as force majeure risk.
It indicates that the external conflict risk in Qatar is high and points have been assigned in three subcomponent War, Cross-Border Conflict ,& Foreign Pressures by considering this.
External conflict:
2 1 3 6
4 4 4 12
Religious Tension
Of the citizen population, Shi'a Muslims account for approximately 10 percent and Sunni Muslims 90 percent. The majority of noncitizens are from South and Southeast Asian and Arab countries working on temporary employment contracts, accompanied by family members in some cases. Most noncitizens are Sunni or Shi'a Muslims, Christians, Hindus, Buddhists, or Bah's. There were no reports of societal abuses or discrimination based on religious belief or practice, and prominent societal leaders took positive steps to promote religious freedom. So the assigned point is 5 out of 6.
Ethnic Tensions
This component is an assessment of the degree of tension within a country attributable to racial, nationality, or language divisions. No Ethnic tension exists in Qatar so the assigned point is 6 out of 6.
Bureaucracy Quality
The other big concern about doing business in Qatar is dealing with the red tape and bureaucracy. The government has made efforts to reduce the problems in this regard but they do still exist. It involves moderate level of risk . so the assigned point is 2 out of 4.
Military in Politics
The Qatar Armed Forces are the military forces of Qatar. The country maintains a modest military force of approximately 11,800 men, including an army (8,500), navy (1,800) and air force (1,500). Qatar's defense expenditures accounted for approximately 4.2% of gross national product in 1993. Qatar has recently signed defense pacts with the United States, as well as with France earlier in 1994. The presence of a large American military base in the country provides the country with a guaranteed source of defense and national security. It indicates that the military politics risk is low.
Corruption
Crime in Qatar is relatively low compared to industrialized nations.]Petty crime such as pick pocketing and bag snatching does occur, but is extremely uncommon. But threat of terrorist attack is a matter of concern The Department of Foreign Affairs and Trade (DFAT) of the Government of Australia advised travelers "to exercise a high degree of caution in Qatar" due to high threat of terrorism. According to Interpol data, criminal homicide rate in Qatar increased from 1.52 to 2.11 per 100,000 population between 1994 and 1996.
Democratic Accountability
This is a measure of how responsive government is to its people, on the basis that the less responsive it is. As the country is not a democratic and it is ruled by the Emir so the power ultimately rests with just four key people; the emir, his wife, the prime minister and the Crown Prince. Understanding policymaking often involves second-guessing the wishes, intentions and rivalries within this small group of decision-makers. So there are low level of democratic accountability in Qatar
Summary
The political situation in Qatar should not be a major issue that keeps anyone from setting up a business in the country. Therefore there is no need to worry that there will be a major shift in policy that will affect business. The summery of total political risk rating are giving below:
Political Risk 67% Sequence A B C D E F G H I J K L TOTAL Component Government stability Socio-economic condition Investment profile Internal conflict External conflict Corruption Military in politics Religion in politics Law and order Ethnic tension Democratic accountability Bureaucracy quality Score 9.00 8.00 10.00 4.00 4.00 5.00 5.00 5.00 4.00 6.00 4.00 2.00 67.00 Points ( max. ) 12.00 12.00 12.00 12.00 12.00 6.00 6.00 6.00 6.00 6.00 6.00 4.00 100.00
The overall political risk rating is 66% which indicates that the country has moderate level of political risk.
Qatar GDP
The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. The Gross Domestic Product (GDP) in Qatar was worth 32 billion US dollars in 1996. GDP in Qatar is reported by the World Bank. The following chart shows the GDP trend of Qatar from 1990 to 1996.
60 50 40 30 20 10 0 1/1/1990 1/1/1991 1/1/1992 1/1/1993 1/1/1994 1/1/1995 1/1/1996
According to ICRG, GDP is between 50to 50.9, 3.9 points should be assigned . As Qatar GDP is 51 billion thats why 3.5 has been assigned for this.
Inflation
6 4 2 0 -2 1/1/1990 1/1/1991 1/1/1992 1/1/1993 1/1/1994 1/1/1995 1/1/1996 Inflation
According to ICRG, if inflation rate is between 4 to 5.9, then 9 points should be assigned . As Qatar inflation is 4.9% thats why 9 points has been assigned for this.
As C/A deficit is more than -12% of GDP , point 8 has been assigned for this.
Summery
The summery of the economic risk rating are provided below:
Economic Risk Rating: GDP per head Real GDP growth rate Annual inflation rate Budget balance as % of GDP
69% 3 10 9 3.5 9 35 5 10 10 10 15 50
THE FINANCIAL RISK RATING The overall aim of the Financial Risk Rating is to provide a means of assessing a countrys ability to pay its way. In essence, this requires a system of measuring a countrys ability to finance its official, commercial, and trade debt obligations. This is done by assigning risk points to a pre-set group of factors, termed financial risk components. The minimum number of points that can be assigned to each component is zero, while the maximum number of points depends on the fixed weight that component is given in the overall financial risk assessment. In every case the lower the risk point total, the higher the risk, and the higher the risk point total the lower the risk.
The appreciation or depreciation of a currency against the US dollar (over a calendar year or the most recent 12-month period is calculated as a percentage change. In 1996 Qatari Riyal has appreciated 4.20876E-05% against US Dollar & for this reason 10 points has been assigned here.
Summary
The summary of Financial risk rating are provided below:
75% 5 7 12 3.5 10 38 10 10 15 5 10 50
Current account as % of export Net international liquidity Exchange Rate stability Total points
THE COMPOSITE RISK RATING The method of calculating the Composite Political, Financial, and Economic Risk Rating remains unchanged. The political risk rating contributes 50% of the composite rating, while the financial and economic risk ratings each contribute 25%. The following formula is used to calculate the aggregate political, financial and economic risk: CPFER (country X) = 0.5 (PR + FR + ER) where CPFER = Composite political, financial and economic risk ratings PR = Total political risk indicators FR = Total financial risk indicators ER = Total economic risk indicators
The highest overall rating (theoretically 100) indicates the lowest risk, and the lowest rating(theoretically zero) indicates the highest risk.
CPFER =0.5(PR+ER+FR)
contracts also encouraged lenders to provide debt capital to the LNG project, because the long term Supply & Purchase Agreement (SPA) created a reliable annual source of revenues and cash flows.
Porters Five Forces Analysis The forces are described below with their factors in case of Aerospace industry where B/E Aerospace Inc. belongs. These forces are: 1. Threat of New Entrants, 2. Degree of rivalry, 3. Threat of Substitutes, 4. Bargaining Power of the Buyers, 5. Bargaining Power of the Suppliers.
Problem Statement
Mario Ippata, her supervisor at Broadway Value and Growth Fund, had listened carefully as Satterthwaite outlined why she thought the Ras Laffan project finance bonds could be a good investment. As they finished their spaghetti and clams, Ippata said, Ellie, no one is perfect when it comes to investing. We all buy duds occasionally. When you present your recommendations tomorrow before the Investment Board, we all will be paying attention to your recommendations. But, we will also want to know that you have considered all the risks carefully, and that you are satisfied that the returns outweigh the risks. Ras Laffan wanted to sell two series of project finance bonds, with $400 million maturing in 2006 carrying a coupon of around 7.6 per cent, and $800 million in 2014 with an interest rate of around 8.3 per cent. The bonds would be sold as a Rule 144A offering, restricted to Qualified Institutional Buyers. Ellison Satterthwaite had been working at Broadway for just less than a year, and her current assignment was to analyze the Ras Laffan project finance bonds. A group of investment managers met weekly to review new investment ideas, on both the equity and bond sides, and Satterthwaite knew that the quality of her analysis and recommendations would help her move towards her goal of running her own fund. So, the problems of this case are1. What are the risks inherent in the project and the notes on how each risk was being handled so as to satisfy bondholders 2. Why Broadway should invest in the Ras Laffan project finance, non-recourse, bonds.
Project Valuation
Here, the project is evaluated in different scenario. NPV and IRR are calculated under three scenarios. These are the base case, reduced LNG price that is worst case and the last one is increased LNG price which is the best case. From the very beginning of taking decision about the projects profitability, WACC has been calculated. Calculation of Cost of Capital (WACC) of Ras Laffan: The calculation of the Cost of Capital of the Ras Laffa is as follow:
Beta Rf Rm 1.8 2.00% 10.00%
Result
Net Present Value is the difference between an investments market vlue and its cost. NPV rule for any project isCriteria Decision Negative NPV Reject the project Positive NPV Accept the project IRR is the rate of return which results in a zero NPV when it is used as the discount rate. Decision rule of IRR isCriteria Decision IRR < Required rate of return Reject the project IRR > Required rate of return Accept the project
We have found the following NPV and IRR for the worst case scenarioNPV IRR -386.1035419 0.079871857
It is observed that NPV for the project is -386.1035 if the LNG price is low. This implies that the initial cost of the project outweigh the future cash inflow of the project by this amount. This leads to the decision that the project is not profitable if the reduced market price for LNG is more likely in the future. So the project should not be accepted. Here, IRR is 7.987% and required rate of return is 8.30%. In this case, IRR is lower than the required rate of return, so the project doesnot earn enough return to satisfy the investors. Therefore the project should not be accepted in this scenario.
Simulation Analysis
Crystal ball software has been used to do the Monte Carlo Simulation analysis. Simulation has been conducted for the worst case scenario. The simulations results for this are given belowSimulation Analysis 1: NPV for Reduced market price
Statistic Trials Mean Median Mode Standard Deviation Variance Skewness Kurtosis Coeff. of Variability Minimum Maximum Mean Std. Error
Forecast values 100,000 -386.11 -384.46 '--59.52 3543.06 -0.1845 3.09 -0.1542 -690.73 -148.01 0.19
Here, the entire range is from -690.73to -148.01. The base case is -386.11. We have run 10,000 trials, and after this trials the standerd error for the mean is 0.19. The coefficient of variability is -0.1542 which is very low.
Simulation Analysis 2: IRR for Reduced market price
Summery output Statistic Trials Mean Median Mode Standard Deviation Variance Skewness Kurtosis Coeff. of Variability Minimum Maximum Mean Std. Error Forecast values 100,000 0.08 0.08 '--0 0 -0.2489 3.15 0.0336 0.07 0.09 0
Here, the entire range is from 0.07to 0.09. The base case is 0.08. We have run 10,000 trials, and after this trials, the standard error for the mean is 0. The coefficient of variability is 0.0336which is less than 0.50.
Debt servicing may shortfall due to lower LNG prices. Actual quantity supplied would be different from the Base Annual Contract Quantity (BACQ), due to operational and other difficulties (for example, it would be uneconomical to ship less than a full tanker load). To mitigate this, the SPA attempted to achieve fair price by linking the monthly LNG price over the contracts life to the JCC index, a basket of prices of crude oils delivered to Japan.To prevent shortfalls from affecting long-term cash flow that might negatively impact debt servicing, the SPA had an adjustment process so that average annual quantities shipped would go up or down to reflect previous period adjustments. The SPA noted that a worst case scenario of two years in a row of five per cent downward adjustments would not threaten debt service. The intent was that while actual quantities shipped each year could fluctuate, the two sides would act to even out these fluctuations so that the long term average annual quantities shipped would approach the BACQ
Construction risk
There are some construction risk associated with this type of project. Risks were present in such complex construction, including corrosion problems, fires and explosions due to simultaneous drilling and production operations. Project sponsors, however, agreed to repay lenders if the project was not completed on schedule and as designed. This project completion guarantee was not joint but several. That is, each of the two project sponsors was only pro rata liable (to the extent of their ownership shares). Thus, Mobil would be responsible for 26.5 per cent of the total guarantee obligation. Ras Laffan would carry different kinds of insurance, including well control insurance during the drilling phase, construction risk insurance, operating insurance and $200 million business interruption insurance.
Price Risk
Higher Crude Oil Prices could cause higher LNG prices. As a result, other energy sources would be more affordable. This could cause Kogas to default. The lack of a minimum floor price raised the importance of trends in crude oil prices. Brent crude oil prices, a benchmark for the industry, dropped to as low as $15 in nominal dollars in 1996, bringing down LNG prices correspondingly. Brent crude oil prices for 1988-1996 are given
below-
Price risk is also mitigated by some way. Mobils $200 million loan funds guaranteed a minimum price through the Kogas price difference provision, equivalent to $1.90 per MMBTU through 2009, and $1.65 for subsequent periods. Kogas spent over $7 billion on LNG infrastructure investments.
Minimum equity levels Approval of new SPAs Issuance of additional debt. Restriction on asset sales exceeding $30 million in a year
Restriction on issuance of new equity with minimum ownership levels for each of the two current sponsors.
Under base case, debt service capacity of Ras Laffan are given below2001
INTEREST COVERAGE RATIO PROJ DEBT COVERAGE RATIO $ 2.67 $ 1.55
2002
$ 3.74 $ 1.73
2003
$ 4.22 $ 1.84
2004
$ 4.74 $ 1.93
2005
$ 5.53 $ 2.07
2006
$ 6.56 $ 2.22
2007
$ 7.71 $ 2.95
2,008
$ 9.21 $ 3.18
Here, we see that the company has enough cash flow available to service its debt. Projected debt service coverage exceeds one for all years this scenario.
$14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $PROJ DEBT COVERAGE RATIO INTEREST COVERAGE RATIO
Worst Case Under worst case, debt service capacity of Ras Laffan are given below2001
INTEREST COVERAGE RATIO PROJ DEBT COVERAGE RATIO $ 2.00 $ 1.16
2002
$ 2.81 $ 1.30
2003
$ 3.12 $ 1.36
2004
$ 3.43 $ 1.40
2005
$ 3.97 $ 1.49
2006
$ 4.61 $ 1.56
2007
$ 5.27 $ 2.02
2,008
$ 6.21 $ 2.14
Here, we see that the company has enough cash flow available to service its debt. Projected debt service coverage exceeds one for all years this scenario. It is close to one in the early years of the lower LNG price scenario.
$9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $2001 2002 2003 2004 2005 2006 2007 2,008 PROJ DEBT COVERAGE RATIO INTEREST COVERAGE RATIO