Joint Technology Initiative for Clean Coal EU Financial Instruments Supporting the Development of Technology Initiatives Warsaw, 23 March 2007 Kim Kreilgaard

2 Table of Content RSFF Implementation Strategy EIB Financing RSFF Key Terms

3 Risk Sharing Finance Facility RSFF – Key Terms FP7 OWN RESOURCES EUR 1bn RSFF provisioning & capital allocation EUR 1bn Eligibility EIB Products Beneficiaries Size of Loans  Commission: R&D  EIB: R&D + I  Large Corporates,Mid-caps, SMEs, turnaround situations, infrastructure SPVs, Universities and PPPs  Corporate loans, project finance  Risk sharing bank facilities, funds that meet the RSFF credit profile  Reduced to min. EUR 7.5m for direct loans/guarantees EUR 10bn in Financing Capacity

4 Geographic Scope: EU 27 and Associated countries (Iceland, Liechtenstein, Norway, Switzerland, Israel, Turkey and Croatia) Risk Sharing Finance Facility  Eligibility Industrial research Pre-competitive development activity EC Window - RTD & D 1 Fundamental research Definition stage / feasibility studies Pilot and demonstration projects EIB Window - RDI 2 Innovation

5  Key counterpart groups Risk Sharing Finance Facility Risk Sharing with Banks NEW PRODUCT DEVELOPMENTS Risk Sharing with Universities Corporate /Project Finance Financing R&D Consortia Targeted beneficiaries: SMEs & MidCaps (low/sub-investmentgrade) Product Ideas: RSFF Facilites; Interest Contingent Supplier Facility, Co-financing, Global Authorisations EIB value added: Banks: risk sharing, capital relief, new customers/cross selling, Beneficiaries: risk sharing, higher debt capacity, lower financing cost Targeted beneficiaries: Universities Product Idea: Royalty fund for scientific research projects EIB value added: Facilitate financing for universities, utilize royalty streams of research results (e.g. patents, lower financing cost Targeted beneficiaries: JTIs, Technology Platforms, EUREKA Joint Ventures,… Product Ideas: SPV based structures for individual R&D consortia EIB value added: Provide structuring know-how (Project Financing) and facilitate private sector funding Targeted beneficiaries: Mid-sized and large corporations (low/sub-investmentgrade), Product Ideas: Structured individual corporate loans for R&D projects (senior/junior debt, mezzanine) EIB value added: Lower Financing Cost, increase of debt capacity (in case of subordination), project risk sharing

6 Table of Content RSFF Implementation Strategy EIB Financing RSFF Key Terms

7 RSFF Implementation Strategy Key objectives Extend EIB financing to new groups of counterparts through the introduction of new products  RSFF Product Development Develop co-financing and risk sharing with financial institutions for small projects / SMEs  RSFF Facilities Pursue a sector strategy in support of RDI investments in Collaboration with lead players, platforms and intermediaries.  RSFF Sector Strategy Collaborate with the Commission on financing FP7 projects  Synergies with ETPs, EUREKA, ESFRI etc.

8 Generating Projects and Portfolio Building  RSFF Product Development : rationale for SMEs/ Midcaps MidCaps/ SMEs SFF Financing (low/sub-investment grade) for RDI projects RSFF Financing Needs Complementary Products Limited debt capacity: equity gap/volatile cash-flows Limited access to capital markets Scarcity of capital is an obstacle for RDI / growth Consolidation pressure + internationalisation Extend Debt Capacity Subordinated Debt/Mezzanine Interest Contingent Loan Extend Lending Capacity Risk Sharing Facilities Co-financing/leverage of mezzanine funds

9 EIB ROLE EIB is Privileged Bank in the dialogue for the development of ETPs, JTIs and ESFRIs Core potential financier of low/sub-investment grade ETP, JTI, ESFRI member companies BENIFITS ETPs provide a wide range of key players for RSFF financing ETP SRAs (Strategic Research Agenda) provides coherent framework for RDI financing EIB can leverage its pan EU focus, sector knowledge, financial engineering and advisory capabilities to the benefits of ETPs, JTIs and ESFRIs. Synergies with ETPs, EUREKA, ESFRI, etc. RSFF Implementation Strategy ESFRI Joint Technology Initiatives (JTIs) European Technology Platforms (ETPs)

10 Table of Content RSFF Implementation Strategy EIB Financing RSFF Key Terms

11  Maximum loan amount: up to 50% of project cost.  Loan tenors: depending on the “economic life” of the investment (generally between 10 and 20 years; exceptions).  Interest Rate: Fixed or Variable  Minimum size per loan: > EUR 25m for investment grade financing > EUR 7.5m under RSFF < EUR 25m Intermediated Credit Lines EIB Financing – Key terms General EIB Terms and Minimum Requirements …be eligible for EIB finance…be technically sound…be financially viable …show accteptable returns …comply regulations (esp. environment/procurement) …have adequate security Projects should…

12 General Overview on the EIB EIB Methods of Operation Bank Intermediated LoansBank Guaranteed LoanDirect Loan EIB Commercial Bank(s) Customer EIB Commercial Bank(s) Customer Commercial Bank(s) Customer Loan Loan(s) LoanGuarantee EIB Loan EIB lends to client’s house bank(s) passing through its low funding cost. Credit risk is born by the com. bank. EIB provides financing directly to the customer alongside other lenders as appropriate. Credit risk is born by the guarantor. EIB provides financing directly to the customer alongside other lenders as appropriate. Credit risk is shared on an equal basis with other bank(s). e.g. Global Loan, Framework Loan

13 The Risk Sharing Finance Facility What can be financed ELIGIBLE COSTS € 20m Time Year 1 € 10mYear 2 € 30mYear 3 Total€ 60m € 45m MAX. EIB LOAN Facilities: project capital expenditures for tangible assets; Activities : project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses. Facilities: project capital expenditures for tangible assets; Activities : project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses. R&D budgets typically cumulated over 3 years (investment programme) Up to 75% of the total project cost. Eligible project cost include:

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