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

Long-term Loans

v3.8.0.1
Long-term Loans
12 Months Ended
Dec. 31, 2017
Borrowings [abstract]  
Long-term Loans
Note 11 - Long-term Loans

A.
Composed as follows:
 
         
Interest
       
   
Linkage
   
rate 2017
   
December 31 2017
 
   
term
   
%
   
€ in thousands
 
Bank loans
   
EURIBOR
     
1.6-3
     
19,661
 
     
Consumer price index in Israel
     
4.65
     
20,820
 
Other long-term loans
           
2.5-5
     
4,383
 
                     
44,864
 

         
Interest
rate 2016 %
       
   
Linkage
term
       
December 31 2016
 
           
€ in thousands
 
Bank loans
 
EURIBOR
     
1.6-2.85
     
15,706
 
Other long-term loans
         
3.05
     
2,031
 
                     
17,737
 

1.
On February 17, 2011, one of the Company's Italian subsidiaries entered into a project finance facilities credit agreement (the “Finance Agreement”) with an Italian bank (Centrobanca – Banca di Credito Finanziario e Mobiliare S.p.A., acquired by UBI in 2013). Pursuant to the Finance Agreement a Senior Loan was provided with respect to the costs of construction of the relevant PV Plants (Del Bianco and Costantini) (up to 80% of the relevant amount), in the amount of Euro 4.1 million, accruing interest at the EURIBOR rate, increased by a margin of 200 basis points per annum, to be repaid in six-monthly installments with a maturity date of December 31, 2027. On November 30, 2011, an amount of approximately euro 3.8 million was drawn down on account of this Senior Loan. Related expenses capitalized to the loan comprised mainly of related notary fee and bank charges amount to approximately euro 170 thousand.
 
The Finance Agreement also requires the payment of commitment fees equal to 0.5% per annum calculated on the undrawn and un-cancelled amount of both the Senior Loan and the VAT Line and certain additional payments, including an arranging fee and annual agency fee.
 
 
The Company's Italian subsidiary undertook to comply with the following financial covenants verified at each repayment date starting from the first installment of the Senior Loan and up to the final redemption date:
DSCR (Debt Rate Cover Ratio): equal or greater than 1.25:1;
LLCR (Loan Life Coverage Ratio): equal or greater than 1.25:1; and
Debt/Equity: equal or less than 80:20.
As of December 31, 2017, the financial covenants were met.
 
2.
On June 29, 2015, the Company entered into a loan agreement with UBI Banca S.c.p.a., in connection with the financing of one of its PV Plants, pursuant to which the Company received financing amounting to approximately euro 10,271 thousand, net of expenses capitalized in the amount of approximately euro 409 thousand bearing an interest at the Euribor 6 month rate plus 2.85% per annum. The interest on the loan and the principal are to be repaid semi-annually. The final maturity date of this loan is December 31, 2029. Draw down of the loan occurred in September 2015.
 
The Company's Italian subsidiary undertook to comply with the following financial parameters verified at each repayment date starting from the first installment of the loan and up to the final redemption date:
DSCR (Debt Rate Cover Ratio): equal or greater than 1.20:1;
LLCR (Loan Life Coverage Ratio): equal or greater than 1.20:1; and
Debt/Equity: equal or less than 75:25.
As of December 31, 2017, the financial covenants were met.
 
3.
The Company's 75% owned Israeli subsidiary promoting the Manara PSP, entered into a loan agreement with the owner of the remaining 25% of its outstanding shares, Sheva Mizrakot Ltd. The unpaid balance (principal and interest) of the loan will bear interest at an annual rate in accordance with the interest rate for the purpose of Section 3(j) of the Israeli Income Tax Ordinance in accordance with the provisions of Regulation 2(a) of the Income Tax Regulations (Determination of Interest Rate for the Purpose of Section 3(j)) And 1986. The maturity date of this loan is December 31, 2020. As of December 31, 2017, the amount of the loan is € 776 thousand.
 
4.
Groen Goor, Independent Power Plant B.V. (“IPP”) (the entity that holds the permits and subsidies in connection with the Goor Project and is wholly-owned by Groen Goor), Ludan, and Ellomay Luxembourg entered into a senior project finance agreement (the “Goor Loan Agreement”), with Coöperatieve Rabobank U.A. (“Rabobank”), that includes the following tranches: (i) two loans with principal amounts of Euro 3,510 thousand (with a fixed interest rate of 3% for the first five years) and Euro 2,090 thousand, (with a fixed interest rate of 2.5% for the first five years), for a period of 12.25 years, repayable in equal monthly installments commencing three months following the connection of the Goor Project’s facility to the grid and (ii) an on-call credit facility of euro 370 thousand with variable interest. As of December 31, 2017, an amount of euro 5,600 thousand was withdrawn on account of these loans. In connection with the Goor Loan Agreement, the following securities were provided to Rabobank: (i) pledge on the present and future rights arising from the feedstock purchase agreement, the EPC agreement, the O&M agreement, the SDE subsidy, the various power and green gas purchase agreements, and the green gas certification supply agreement, (ii) pledge on all present and future (a) receivables arising from business and trade, and (b) stock and inventory including machinery and transport vehicles of Groen Goor and IPP; (iii) all rights/claims of Groen Goor and IPP against third parties existing at the time of the execution of the Loan Agreement, including rights from insurance agreements.

 
5.
Groen Gas Oude Tonge, Groen Gas Oude-Tonge Holding B.V. (the entity that holds the permits and subsidies in connection with the Oude Tonge Project and is wholly-owned by Groen Gas Oude Tonge), Ludan, and Ellomay Luxembourg entered into a senior project finance agreement (the “Oude Tonge Loan Agreement”), with Rabobank, that includes the following tranches: (i) two loans with principal amounts of euro 3,150 thousand and euro 1,700 thousand, each with a fixed annual interest rate of 3.1%, for a period of 12.25 years, repayable in equal monthly installments commencing three months following the connection of the Oude Tonge Project’s facility to the grid and (ii) an on-call credit facility of euro 100 thousand with variable interest. As of December 31, 2017, an amount of euro 3,150 thousand was withdrawn on account of these loans. In connection with the Oude Tonge Loan Agreement, the following securities were provided to Rabobank: (i) pledge on the present and future rights arising from the feedstock purchase agreement, the EPC agreement, the O&M agreement, the SDE subsidy, the various power and green gas purchase agreements, and the green gas certification supply agreement, (ii) pledge on all present and future (a) receivables arising from business and trade, and (b) stock and inventory including machinery and transport vehicles of Groen Gas Oude Tonge and Groen Gas Oude Tonge Holding B.V.; (iii) all rights/claims of Groen Gas Oude Tonge and Groen Gas Oude Tonge Holding B.V. against third parties existing at the time of the execution of the Loan Agreement, including rights from insurance agreements.
 
In connection with the Loan Agreements, Ludan and Ellomay Luxemburg, the Company wholly-owned subsidiary: (i) provided the following undertakings to Rabobank: (a) that Groen Goor and Groen Gas Oude Tonge  will not make distributions to its shareholders for a period of two years following the execution of the Loan Agreement, (b) that Groen Goor will not make distributions or repurchase its shares so long as the equity to debt ratio of Groen Goor is less than 40%, (c) that in the event the equity to debt ratio of Groen Goor and Groen Gas Oude Tonge  will be below 40%, its shareholders will invest the equity required in order to increase this ratio to 40%, pro rata to their holdings in Groen Goor and Groen Gas Oude Tonge  and up to a maximum of Euro 1.2 million, and (d) that they will provide the equity required for the completion of the Goor Project and (ii) provided pledges on their respective rights in connection with the shareholders loans which each provided to Groen Goor and Groen Gas Oude Tonge  , which loans shall also be subordinated by Ellomay Luxembourg and Ludan in the favor of Rabobank. As of December 31, 2017, the financial covenants were met.
 
Shortages in liquidity as a result of exceeding the construction budget and/or extension of start-up costs of the Goor Project and the Oude Tonge Project shall be provided by Ludan and Ellomay Luxembourg and not financed by Rabobank.
 
In addition, the Company provided a guarantee to Rabobank for the fulfillment of Ellomay Luxemburg’s undertakings set forth above.
 
6.
On May 16, 2012, Talmei Yosef entered into a loan agreement with Israeli consortium led by Israel Discount Bank (the “Israeli consortium”) in connection with the financing of its PV Plant, pursuant to which Talmei Yosef received financing amounting to NIS 80,000 thousand. During 2013, in accordance with the millstones set on the loan agreement, an aggregate amount of NIS 60,000 thousand was withdrawn on account of such loan agreement. During 2014, an additional aggregate amount of NIS 20,000 thousand was withdrawn.
 
The loan is linked to the consumer price index and bears an annual interest of 4.65%. The interest on the loan and the principal are repaid semi-annually. The final maturity date of this loan is December 31, 2031.
 
On December 24, 2014, Talmei Yosef entered into an additional loan agreement with the Israeli consortium in connection with additional financing in the amount of NIS 25,000 thousand.   The loan is linked to the consumer price index and bears an annual interest of 4.52%. The interest on the loan and the principal are repaid semi-annually. The final maturity date of this loan is June 30, 2028.
 
In connection with these loans, the Talmei Yosef project company provided charges on its rights in the PV Plant, notes, equity, goodwill, on all assets of the PV Plant and on future receivables from the IEC and undertook customary limitations and undertakings, including maintaining the following financial ratios: (i) upon withdrawal of funds on account of the loan framework (based on milestones), maintaining an annual Historic ADSCR (Average Debt Service Coverage Ratio), a Projected ADSCR and a Projected LLCR (loan life coverage ratio) of 1.25:1.00, (ii) upon a distribution of profits from the project company, maintaining a Historic ADSCR, a Projected ADSCR and a Projected LLCR of 1.20:1.00, and (iii) throughout the term of the loan, maintaining an annual ADSCR and a Projected ADSCR of 1.05:1.00 for the following 12 months and maintaining an LLCR of 1.08:1.00.
 
 
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
   
3,403
     
1,203
 
Third year
   
3,584
     
1,206
 
Fourth year
   
3,712
     
1,233
 
Fifth year
   
3,795
     
1,642
 
Sixth year and thereafter
   
27,597
     
11,677
 
                 
Long-term loans
   
42,091
     
16,961
 
Current maturities
   
2,773
     
776
 
   
44,864
     
17,737
 
                 

C.
In order to minimize the interest-rate risk resulting from liabilities to banks and financing institutions in Italy linked to the Euribor, the Company executed swap transactions. See Note 21.
 
D.            Movement in liabilities deriving from financing activities

         
Liabilities
       
                               
                               
         
Loans and
   
Convertible
   
Finance lease
       
   
Note
   
borrowings
   
debentures
   
liability
   
Total
 
         
NIS thousands
 
Balance as at January 1, 2017
         
17,737
     
33,790
     
4,338
     
55,865
 
Changes from financing cash flows
                                     
Loan from business combination
   
6
     
21,370
     
-
     
-
     
21,370
 
Proceeds from issue of convertible debentures
   
12
     
-
     
31,175
     
-
     
31,175
 
Payment of Debentures
   
12
     
-
     
(4,842
)
   
-
     
(4,842
)
Receipt of loans
   
10,11
     
7,443
     
-
     
-
     
7,443
 
Repayment of loans
   
10,11
     
(1,892
)
   
-
     
-
     
(1,892
)
Accrued interest
   
10,11
     
161
     
-
     
-
     
161
 
Payment of finance lease liability
   
10
     
-
     
-
     
(332
)
   
(332
)
Transaction costs related to borrowings
           
165
     
320
     
14
     
499
 
Total net financing cash flows
           
44,984
     
60,443
     
4,020
     
109,447
 
                                         
Effect of changes in foreign exchange rates
           
(120
)
   
(2,812
)
   
-
     
(2,932
)
Balance as at December 31, 2017
           
44,864
     
57,631
     
4,020
     
106,515