Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Finance Lease Obligation

v3.8.0.1
Finance Lease Obligation
12 Months Ended
Dec. 31, 2017
Disclosure of finance lease and operating lease by lessee [abstract]  
Finance Lease Obligation
Note 10 – Finance Lease Obligation

A.
Composed as follows:
 
   
Linkage
   
Interest rate
   
December 31
   
December 31
 
   
Terms
   
2016 and 2017
   
2017
   
2016
 
         
%
   
Euro€ in thousands
 
Leasing institution
   EURIBOR      
3.5
     
4,020
     
4,338
 
 Current maturities
               
330
     
318
 
 Leasing institution-long term
                   
3,690
     
4,020
 
 
1.
On December 31, 2010, two wholly-owned Italian subsidiaries of the Company entered into financial leasing agreements, (the “Leasing Agreements”) in the amount of euro 3,000 thousand each (euro 6,000 thousand in total) for the financing of the subsidiaries, with a nominal annual interest rate of 3.43%. The Company is required to make monthly payments in the amount of euro 20 thousand each, commencing 210 days after issuance, for the duration of the Leasing Agreements (17 years) which are linked to the 3 months EURIBOR. As of December 31, 2011, the first two drawdowns under the Leasing Agreements were received in the aggregate amount of approximately euro 5 million net of expenses capitalized in the amount of approximately euro 1.142 million comprised mainly of Cadastral tax and VAT paid in connection with the Leasing Agreements. In March 2012, the final drawdown under the Leasing Agreements was received in the amount of approximately euro 818.5 thousand.
 
2.
The Leasing Agreements include the following covenants:
       
a.
A declaration that the shareholders credit towards the two Italian wholly-owned subsidiaries will be subordinated to the leasing company’s credit;
b.
The Company undertook not to transfer the entire holdings in two wholly-owned Italian subsidiaries and shares not exceeding 20% of its holdings in the wholly-owned Luxembourgian subsidiary that wholly-owns the two Italian subsidiaries;
c.
The Company undertook to assign (as guarantee) the receivables from GSE; and
d.
The Company undertook to encumber in favor of the leasing company the rights in connection with the guarantees provided under the EPC Contracts and the Operation and Maintenance agreements.

3.
The Company accounted for the transaction as a sale and a finance leaseback as the Company retained the significant risks and benefits of ownership related to its relevant PV Plants. The carrying value of the photovoltaic plants was left unchanged, with the sales proceeds recorded as a finance lease obligation. As of December 31, 2017, the financial covenants were met.


B.
The aggregate annual maturities are as follows:
 
   
December 31
   
December 31
 
   
2017
   
2016
 
   
€ in thousands
 
Second year
   
342
     
329
 
Third year
   
354
     
342
 
Fourth year
   
366
     
354
 
Fifth year
   
379
     
366
 
Sixth year and thereafter
   
2,249
     
2,629
 
     
3,690
     
4,020
 
Current maturities
   
330
     
318
 
Finance lease obligation
   
4,020
     
4,338