Direct RSFF financing
Corporate Debt Financing (Senior Loans)
EIB loans in general are highly flexible and can have the following structural features:
- Lending maturities of up to 10 years (depending on the "economic" life of the project)
- Various repayment profiles (amortisation of loan principal during the loan life or at maturity ("bullet"), constant annuities or tailored instalment)
- Possible initial reimbursement-free period of several years
- Various interest rate formulae (fixed, floating, revisable, convertible or tailored)
- Performance-based pricing schemes
- Secured or unsecured
- Structurally subordinated
- Availability of all standard currencies
EIB lending decisions are based on a bankability assessment - the borrower's ability to repay the loan and interest. Key assessment criteria are profitability, the soundness of the borrower's (and/or guarantor's) balance sheet and the ability to generate sustainable cash-flows.
General terms and conditions of EIB loans/guarantees:
- Maximum loan amount: up to 50% of eligible project cost
- Minimum loan amount: EUR 7.5m (smaller loans will preferably be handled through the Risk Sharing Instrument)
- Due diligence focuses on financial, technical, market & legal risks. The EIB usually relies on own resources for due diligence projects;
- The loan approval process usually takes 3-6 months
- Loan pricing: commensurate to the level of risk assumed by the Bank, depending on the borrower’s financial standing and contractual terms and conditions agreed
- Fees: in accordance with the complexity of the transaction
Example of a project eligible for RSFF Corporate Debt Financing:
An automotive supplier company seeks financing to develop, at its own risk, a new emission filter for a car manufacturer.
Project Financing (Senior Loans)
EIB RSFF Project Financing is granted to RDI projects which are implemented by a legally independent project company created solely for the purpose of the project. Project financing is typically in the form of a long-term senior loan.
Financing is provided to:
Self-sustaining legal entities
The assessment of the debt servicing capacity of the project company is based primarily on the cash flow generated by the project. Security for the project financing is provided through the assignment of rights granted under contracts concluded by the project company with third parties.
Transnational and/or collaborative research projects with a large number of different stakeholders (e.g. European Research Infrastructures)
These are typically financed under Public Private Partnership programmes ('PPP') or Private Finance Initiatives ('PFI'). Under such structures, private investors or operators cooperate closely with public sector institutions such as the European Commission.
The EIB cooperates closely with other financing partners (e.g. arranging bank, sponsors) to develop the appropriate financing structure for the project company,).
General terms and conditions of EIB loans/guarantees:
Maximum loan amount: up to 50% of eligible project cost
Minimum loan amount: EUR 7.5m (smaller loans will preferably be handled through the Risk Sharing Instrument)
Due diligence focuses on financial, technical, market & legal risks. EIB usually relies on own resources for due diligence projects
The loan approval process usually takes 3-6 months
Loan pricing: commensurate to the level of risk assumed by the Bank, depending on the solidity of the financial projections of the project company and contractual terms and conditions agreed
Fees: in accordance with the complexity of the transaction
Example of a project eligible for RSFF Project Financing:
Two energy companies develop an innovative renewable energy generation plant. In order to share the risk, the sponsors create a designated project company.
Mezzanine Financing
Under RSFF, the EIB can provide Mezzanine Financing in the form of subordinated debt.
Mezzanine Financing combines features of equity financing (e.g. subordinated ranking versus senior debt, participation in value gains of the company/project, strong information/control rights of the lender) with classical debt features (e.g. senior ranking versus equity, obligation to repay the principle, tax-deductibility of interest payments).
Mezzanine financing typically strengthens the borrower’s economic capital without diluting existing shareholders’ rights and generally improves the borrower’s credit rating.
General terms and conditions of EIB mezzanine loans/guarantees:
Lending term of 5-6 years
Repayment at maturity, in full
Interest payments include a cash premium at maturity, in order to compensate for higher risks assumed by the lender
Depending on the overall structure, EIB Mezzanine Financing can be made available in the form of a subordinated loan or guarantee
Maximum loan amount: up to 50% of eligible project cost
Minimum loan amount: EUR 7.5m (smaller loans will preferably be handled through the Risk Sharing Instrument)
Due diligence focuses on financial, technical, market & legal risks. EIB usually relies on own resources for due diligence projects
The loan approval process usually takes 6 months
Loan pricing: commensurate to the level of risk assumed by the Bank, depending on the borrower’s financial standing and contractual terms and conditions agreed
Fees: in accordance with the complexity of the transaction
Example of a project eligible for RSFF Mezzanine Financing:
A highly leveraged RDI intensive company in a turn-around situation is seeking to optimise its balance-sheet through a quasi-equity financing instrument. As a result, the holdings of the existing shareholders will not be diluted.
