Programme for the Award of State Aid to Support the Maritime, Transport, Transport Infrastructure and Related Sectors in the Current COVID-19 Outbreak

HBOR Programme for the Award of State Aid to Support the Maritime, Transport, Transport Infrastructure and Related Sectors in the Current COVID-19 Outbreak

Goal of the Programme

To ensure financial support to undertakings active in the maritime, transport, transport infrastructure and related sectors to mitigate the effects of the crisis caused by the COVID-19 outbreak on their business.

Legal basis

Decision of the Government of the Republic of Croatia on Adoption of the Programme for the Award of State Aid to Support the Maritime, Transport, Transport Infrastructure and Related Sectors in the Current COVID-19 Outbreak, of 2 July 2020 The Programme was approved by the European Commission on 30 June 2020, pursuant to the Communication from the Commission – Temporary framework for the State aid measures to support the economy in the current COVID-19 outbreak, of 19 March 2020 and its amendments of 3 April 2020 and 8 May 2020.

Implementing entities of the Programme

HBOR for large undertakings and HAMAG-BICRO for SMEs, as agents of the Ministry of the Sea, Transport and Infrastructure (hereinafter: MSTI).

Type of state aid

Issuing of guarantees for and on behalf of the Republic of Croatia on new liquidity loans to address the problems caused by the crisis as a result of the COVID-19 outbreak. The measure does not apply to existing liquidity loans. The guarantee is unconditional, irrevocable and on first demand.

Duration of the Programme

Lenders may submit applications for a guarantee to HBOR from the day the Programme enters into force until the end of the Programme validity, provided that the guarantee must be issued no later than 31 December 2020. Lenders’ applications will be processed in accordance with the order of their receipt and accordingly, the funds provided for the implementation of the Programme will be allocated until they have been utilised in full.

Guarantee coverage

The guarantee shall cover up to 90% of the underlying loan principal (losses are sustained proportionally according to the amount of guarantee coverage and under the same conditions (pari passu) by the Lender and MSTI).

Deadline for submission of call for payment under the guarantee

The Lender may submit a call for payment to HBOR under the issued guarantee:

the day after the maturity date of the last instalment/annuity of the loan under the loan contract, or
on the day of cancellation or termination of the loan contract, or
on the day of initiation of bankruptcy proceedings over the Borrower, depending on which of the above-mentioned events occurs earlier, and no later than 120 days after the occurrence of these events.

Procedure for submitting a call for payment under the guarantee

The Lender shall submit to HBOR in a physical written form the following documentation:

call for payment signed by a person authorised to represent the Lender (or specially authorised to undertake such action), which will explicitly state that the maturity date of the last instalment/annuity of the loan has expired and/or that the loan contract with the Borrower has been cancelled /terminated and/or that bankruptcy proceedings have been initiated over the Borrower (depending on which of the above-mentioned events occurs earlier) with the exact date of occurrence of the fact in question and will explicitly state that the amount requested has not been otherwise collected, and the call for payment will indicate the balance of debt on the date of occurrence of the respective event;
extract from the business records of the Lender with the balance for the payment of documented uncollected claims on account of the guaranteed principal.

Deadline for payment upon call for payment under the guarantee

Within 60 days from the date of receipt of call for payment under the guarantee.

Payment under the guarantee

Payment under the guarantee is made by MSTI in favour of the Lender’s account in HRK. For loans with the currency clause, payment is made in HRK at the middle exchange rate of the Croatian National Bank on the payment date.

Purpose of the loans

New loans for liquidity to address the problems caused by the crisis as a result of the COVID-19 outbreak.

Lenders /beneficiaries of guarantees

Banks in the Republic of Croatia that operate in accordance with the Credit Institutions Act and HBOR. Lenders are obliged to prove clearly to HBOR that the advantages of the guarantee have been passed on to the largest extent possible to Borrowers by providing more favourable loan terms and conditions for Borrowers than usual (for example, in the form of providing higher volumes of financing, riskier portfolios, lower interest rates and/or lower collateral requirements etc.).

Eligible Borrowers

Undertakings registered in the Republic of Croatia, regardless of their legal form:

that are large undertakings in terms of size (pursuant to the EU definition )
that are not in difficulty and/or were not in difficulty on 31 December 2019
that are faced with liquidity shortages because their business activities have been reduced or completely discontinued due to the exceptional circumstances caused by the COVID 19 outbreak, or if they face difficulties in operation as a result of the outbreak:
- they saw a significant decrease in turnover in the relevant period of 2020 compared to the same period in 2019; and/or
- they can expect the achievement of business income, based on the business indicators in the first six months of 2020, at a level significantly lower (at least 20%) than the business income achieved in 2019; and/or
- they achieved a physical decrease in traffic and/or in volume of transport of passenger and freight, travel and tourist reservations, etc. in 2020 compared to the same period in 2019; and/or
- with cancelled or postponed for a longer period (at least a year) previously agreed and planned activities or other business activities according to the business plans for 2020
that are not subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market.
that have not paid the profit/dividend from previous periods in 2020, unless it is a legal obligation.

Eligible activity of the Borrower

Undertaking registered to perform as its main activity one of the following activities (National Classification of Economic Activities 2007): 42.91 Construction of water projects 49.10 Passenger rail transport, interurban 49.20 Freight rail transport 49.31 Urban and suburban passenger road transport 49.39 Other passenger transport n.e.c. (taxi transport is excluded) 49.41 Freight transport by road 50.10 Sea and coastal passenger water transport 50.30 Inland passenger water transport 50.40 Inland freight water transport 51.10 Passenger air transport 51.21 Freight air transport 50.20 Sea and coastal freight water transport 52.10 Warehousing and storage 52.2 Support activities for transport 77.34 Renting and leasing water transport equipment 79.11 Travel agency activities (only those related to the nautical tourism) 79.12 Tour operator activities (related to the nautical tourism) 93.29 Ports of nautical tourism The Programme is applied to the following activities as well: 08.1 Quarrying of stone, sand and clay 30.11 Building of ships and floating structures 33.15 Repair and maintenance of ships and boats 43.1 Demolition and site preparation relating to construction, technical improvement, traffic and technical modernisation of waterways, technical maintenance and enabling of waterways and navigational and safety facilities disabled due to natural disasters. Activities in the agriculture, fishery and aquaculture sectors are not eligible.

Loan collaterals

HBOR will not require the Lender to obtain special collaterals other than those determined by the Lender’s decision, i.e. those that the Lender will arrange under the loan contract. In the recovery, inflows from all collaterals arranged under the loan contract will be shared between the Republic of Croatia and the Lender pro rata in accordance with the level of guarantee coverage (maximum 90:10).

Guarantee issuance process

The Borrower submits to the Lender an application for approval of a loan with the HBOR guarantee
The Lender submits to HBOR the Decision on loan approval, the guarantee application and the prescribed documentation
Expert teams of HBOR process the guarantee application
HBOR and MSTI make a decision on guarantee
HBOR informs the Lender on the guarantee decision
In case of making of a favourable decision on guarantee:

The Borrower concludes the loan contract with the Lender and provides collaterals as security for loan repayment
HBOR concludes the guarantee agreement with the Lender and the Borrower
An invoice for the guarantee premium is delivered to the Borrower. The guarantee premium is charged in accordance with the Programme.
The Borrower may pay the guarantee premium from the first disbursement of the loan, otherwise the guarantee shall take effect only after the Borrower has paid the premium
HBOR notifies the Lender that the guarantee premium has been paid by the Borrower
The Lender provides the loan funds.

Recovery under the guarantee

The recovery is managed by the Lender for the entire claim (its own claim and the claim of the Republic of Croatia) that will be shared between the Republic of Croatia and the Lender pro rata in accordance with the level of guarantee coverage (maximum 90:10).

Special features of each of the Programme measures

Measure A, Section „3.1. Aid in the form of limited amounts of aid“

The total value of guarantees is HRK 200,000,000.00 (HBOR and HAMAG-BICRO)

Value of the guarantee per Borrower

Based on the submitted application for liquidity funds, in accordance with the Borrower’s needs. The maximum value of guarantee may be EUR 800,000.00. For loans in HRK, the middle exchange rate of the Croatian National Bank on the day of the decision on loan approval will be used for the calculation in EUR.

Loan currency

Loans in HRK, and loans with currency clause indexed to EUR.

Loan maturity

At least 1 year, but not more than 5 years. It shall be calculated from the day of conclusion of the loan contract until the final loan repayment date.

Interest rate on loan

Determined by the Lender, but 2% p.a. at the maximum In the case of a variable interest rate, it cannot be more than 2% at the time of loan approval, i.e. the Lender may not increase the margin to the agreed reference rate during the loan repayment.

Guarantee premium

0.2% on the nominal (net) guarantee amount, regardless of the guarantee duration and the amount of guarantee coverage.

Collection of the guarantee premium

It shall be calculated by HBOR and charged to the Borrower in HRK at the middle exchange rate of the Croatian National Bank on the day of issue of the invoice, one-off for the entire duration of the guarantee. The premium can be paid from the loan, on the occasion of the first loan disbursement. Otherwise, the guarantee shall take effect when the Borrower has paid the guarantee premium.

Cumulation of measure A with other measures of the Temporary Framework

Measure B, Section „3.2. Aid in the form of guarantees on loans“

The total value of guarantees is HRK 400,000,000.00 (HBOR and HAMAG-BICRO).

Value of the guarantee per Borrower

For loans with maturity until 31 December 2020 and after that date, the minimum guarantee amount will exceed EUR 800,000.00 (for loans in HRK, the middle exchange rate of the Croatian National Bank on the day of the decision on loan approval shall be used for the calculation), and the maximum loan amount per Borrower shall not exceed:

the double annual wage of the Borrower (including social charges as well as the cost of personnel working on the undertaking’s site, but formally in the payroll of subcontractors) for 2019, or for the last year available. In the case of undertakings created on or after 1 January 2019, the maximum loan amount must not exceed the estimated annual wage bill for the first two years of operation or
25% of the Borrower’s total turnover in 2019.

Loan currency

Loans in HRK, and loans with currency clause indexed to EUR.

Loan maturity

6 years at the maximum. It shall be calculated from the day of conclusion of the loan contract until the final loan repayment date.

Interest rate on loan

Guarantee premium

Calculated on the nominal (net) guarantee amount, 50 bps for the 1st year, 100 bps for the 2nd and 3rd years and 200 bps for the 4th to 6th years.

Collection of the guarantee premium

Cumulation of measure B with other measures of the Temporary Framework

The aid granted under temporary measures covered by this Programme may be cumulated with aid under de minimis aid Regulations or the General Block Exemption Regulations, provided the provisions and cumulation rules of those Regulations are respected.

Guarantees under Section 3.2. of the Temporary Framework (Measure B) may be cumulated with aid granted under other sections of the Temporary Framework, approved by the Commission, provided the provisions in those specific sections are respected.

Guarantees under Measure B may not be granted for loans, for which aid has already been granted in form of subsidised interest rates (Section 3.3. of the Temporary Framework). The Borrower may use the aid in form of guarantee under Measure B in case it has received the aid in form of subsidised interest rates (Section 3.3. of the Temporary Framework) for other loans, provided the overall amount of loans under both measures does not exceed the maximum loan amount, i.e. the ceilings set out in point 25(d) or in point 27(d) of the Temporary Framework – COVID -19.

The Borrower may benefit in parallel from multiple schemes of aid under the Programme complied with Section 3.2. of the Temporary Framework, provided the overall amount of loans per Borrower does not exceed the ceilings set out in point 25(d) of the Temporary Framework.