{"id":1459,"date":"2024-06-06T10:55:10","date_gmt":"2024-06-06T08:55:10","guid":{"rendered":"https:\/\/kurtovicfinancial.com\/?p=1459"},"modified":"2024-06-08T08:13:16","modified_gmt":"2024-06-08T06:13:16","slug":"favourable-bank-financing-of-a-solar-power-plant-what-we-did-and-how-we-did-it","status":"publish","type":"post","link":"https:\/\/kurtovicfinancial.com\/en\/favourable-bank-financing-of-a-solar-power-plant-what-we-did-and-how-we-did-it\/","title":{"rendered":"FAVOURABLE BANK FINANCING OF A SOLAR POWER PLANT \u2013 WHAT WE DID AND HOW WE DID IT"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">I am happy to have supported a client from the engineering \/ energy sector in obtaining <strong>EUR 3m 10-year bank loan to finance its solar power plant project. The financing has been secured under extremely favourable conditions.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"678\" src=\"https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-1024x678.jpg\" alt=\"\" class=\"wp-image-1456\" style=\"width:373px;height:auto\" srcset=\"https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-1024x678.jpg 1024w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-300x199.jpg 300w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-768x509.jpg 768w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-1536x1017.jpg 1536w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-2048x1356.jpg 2048w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-113x75.jpg 113w, https:\/\/kurtovicfinancial.com\/wp-content\/uploads\/2024\/06\/Solar-power-plant-480x318.jpg 480w\" sizes=\"auto, (max-width:767px) 480px, (max-width:1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-1e934d45c74348685b3ad9cc773a680a wp-block-paragraph\"><strong>What have we managed to secure?<\/strong><\/p>\n\n\n\n<ul class=\"has-black-color has-text-color has-link-color wp-block-list wp-elements-4ec6e55595963de1386d0b0581c08d15\">\n<li><strong>Full market risk accepted by the bank<\/strong> (hence no PPA or a similar arrangement)<\/li>\n\n\n\n<li><strong>Very low interest rate<\/strong> \u2013 1,62% fixed for the duration of the loan (10 years)<\/li>\n\n\n\n<li><strong>No recourse to client\u2019s other businesses<\/strong><\/li>\n\n\n\n<li><strong>Only one, favourable financial covenant<\/strong><\/li>\n\n\n\n<li><strong>Much more<\/strong>, but these elements shall remain undisclosed (these remain my secret sauce \ud83d\ude09)<\/li>\n<\/ul>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-14226421c12674a017d098fb1f76d7a0 wp-block-paragraph\"><strong>How we did it?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>First, we built the business case, including the cash flow projections under several scenarios.<\/strong> The biggest challenge were the fluctuations of key assumptions over the past year (most notably of the electricity price), because there was no PPA or a similar agreement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Second, based on the cash flow model, we selected the appropriate financing structure,<\/strong> including the loan tenor, acceptable interest rate, borrower, acceptable guarantors, etc.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Third, resulting from the points 1 and 2, we identified relevant contractual clauses.<\/strong> We split them into <strong>a) dealbreakers,<\/strong> <strong>b) clauses ready to negotiate<\/strong> and what we would be ready to accept under each of them, <strong>and c) acceptable clauses<\/strong>. This allowed us to be clear towards the bank and ourselves what we can realistically achieve.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Finally, the client signed the deal!<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All of this would not have been possible without <strong>a proper strategic approach.<\/strong> <strong>Obtaining bank financing requires diligence and strategic thinking,<\/strong> with very little space for error. You have to develop a plan A, but also a plan B, C\u2026 &#8211; many alternatives and mitigants to what could come your way.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I have to admit \u2013 it was not an easy ride. The key assumptions were changing constantly, including electricity price, interest rate, equipment price, and most challenging \u2013 the bank\u2019s standpoint. To be honest, we did not manage to get everything we wanted, because everything comes at a cost. Still, we managed to renegotiate the bank\u2019s initial requirements and sign the deal under very favourable conditions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This project will improve Croatia\u2019s energy balance by adding sustainable and renewable energy to its energy mix.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">(The client\u2019s and the bank\u2019s name shall remain undisclosed due to confidentiality reasons.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">_____<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In case you are contemplating obtaining a bank loan and:<\/strong><\/p>\n\n\n\n<ul class=\"has-black-color has-text-color has-link-color wp-block-list wp-elements-207001a94eb8f4acf8b7afae01667c5c\">\n<li><strong>want to secure favourable financing<\/strong><\/li>\n\n\n\n<li><strong>find the best possible financing structure for your company so you don&#8217;t risk losing everything<\/strong><\/li>\n\n\n\n<li><strong>want to achieve many benefits unknown to most borrowers<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>&#8211; feel free to get in touch.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I am happy to have supported a client from the engineering \/ energy sector in obtaining EUR 3m 10-year bank loan to finance its solar power<span class=\"excerpt-hellip\"> [\u2026]<\/span><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[264,265],"tags":[266,268,267],"class_list":["post-1459","post","type-post","status-publish","format-standard","hentry","category-credit-risk-management-2","category-financial-management-2","tag-bank-loan","tag-project-financing","tag-renewable-energy"],"_links":{"self":[{"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/posts\/1459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/comments?post=1459"}],"version-history":[{"count":2,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/posts\/1459\/revisions"}],"predecessor-version":[{"id":1462,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/posts\/1459\/revisions\/1462"}],"wp:attachment":[{"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/media?parent=1459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/categories?post=1459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kurtovicfinancial.com\/en\/wp-json\/wp\/v2\/tags?post=1459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}