LOAN FOR PROJECT

Loans for larger projects (€5 million - €1000 Million)

EURO CAPITAL invests in private sector projects can range from €5 million - €1000 million.
The EURO CAPITAL's loans are structured with a high degree of flexibility to provide loan profiles that match client and project needs. This approach determines each loan currency and interest rate formula.

The basis for a loan is the expected cash flow of the project and the ability of the client to repay the loan over the agreed period. The credit risk can be taken entirely by the Bank or may be partly syndicated to the market. A loan may be secured by a borrower's assets and/or it may be converted into shares or be equity-linked. Full details are negotiated with the client on a case-by-case basis.

Loan features

• Minimum €5M - €1000 Million, although this can be smaller in some cases.
• Fixed or floating rate.
• Senior, subordinated, mezzanine or convertible debt.
• Denominated in major foreign or local currencies.
• Short to long-term maturities, from 5 to 15 years.
• Project-specific grace periods may be incorporated.
  Interest ratesEURO CAPITAL loans are based on current market rates and are priced competitively. Following a successful enquiry and once a project has been presented to the Bank; financial terms can be discussed in detail with banking staff. The EURO CAPITAL does not subsidies projects, nor does it offer soft loans.
  We offer both fixed and floating interest rates:

• Fixed rate basis, linked to a floating rate such as LIBOR.
• Floating rate basis with a cap or a collar. As the type rate directly affects profitability, a project's financial structure should preferably include both floating and fixed rate loans. The mix is evaluated with respect to client and project sensitivities to interest rate movements.
  Fees and chargesA margin is added on to the base rate. The margin is a combination of country risk and project-specific risk. This information is confidential to the client and the Bank.In addition to the margin, the Bank may charge some of the following fees and commissions:

• Front-end commission, paid up-front.
• Commitment fee, payable on the committed but undisbursed loan amount.
• Loan conversion fee, paid at the time of interest rate or currency conversion on the amount which is to be converted.
• Prepayment, cancellation and late payment fees are also charged if necessary. In line with commercial practice, sponsors will be obliged to reimburse the Bank for out-of-pocket expenses, such as fees for technical consultants, outside legal counsel and travel expenses.
  Other lending termsFull lending terms are negotiated with the client for each project.
  Recourse
  Recourse to a sponsor is not required. However, the Euro Capital may seek specific performance and completion guarantees plus other forms of support from sponsors of the kind that are normal practice in limited-recourse financing.
  Insurance
  The Bank requires project companies to obtain insurance against normally insurable risks. Examples include theft of assets, outbreak of fire, specific construction risks. The Euro Capital does not require insurance against political risk or non-convertibility of the local currency.
  Security
  Euro Capital usually requires the companies it finances to secure the loan with project assets. These can include:

• Mortgage on fixed assets, such as land, plant and other buildings.
• Mortgage on movable assets, such as equipment, other business assets.
• Assignment of the company's hard currency and domestic currency earnings.
• Pledge of the sponsor's shares in the company.
• Assignment of the company's insurance policy and other contractual benefits.
  Covenants Typical project finance covenants are required as part of the loan package. Such covenants, limiting indebtedness and specifying certain financial ratios and various other issues, will be negotiated.
  Loan repaymentRepayment is normally in equal, semi-annual instalments. Longer maturities may be considered on an exceptional basis, for example, up to 15 years for large infrastructure operations.
  Hedging possibilitiesThe Bank can help manage financial risks associated with a project's assets and liabilities. This covers foreign exchange risk, interest rate risk and commodity price risk. Risk hedging instruments include currency swaps, interest rate swaps, caps, collars and options and commodity swaps.
  Loans for smaller projectsProjects that are too small to be financed directly by Euro Capital can still benefit from our investments.The Euro Capital supports local commercial banks, which in turn provide loans to SMEs and municipalities. Tools that may be available include credit lines, bank-to-bank loans, standby credit facilities and equity investments in the local banks.MSMEs should contact local banks directly to access finance and check local requirements and investment limits. Loans to mirco, small and medium businesses are available from these banks across the Euro Capital regionBusinesses looking to obtain loans through local banks should provide:

• Sound business plans for establishing or expanding a company's business.
• Solid management with a proven track record.
• Products that are competitive in the marketplace.
• Information on owners/partners.
• Financial history.
• Security in the form of pledges, mortgages, etc.
• Funds provided must be used in strict accordance with the aims stated in the original business plan.
• In line with the Euro Capital's mandate, banks ensure that all proposals pay due regard to environmental issues.
• Funding cannot be provided to majority state-owned companies or for government-guaranteed projects.