Altria Corpo and PKF Attest support companies in applying to the COFIDES Recapitalisation Fund

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The COFIDES Recapitalisation Fund aims to quickly and effectively strengthen and restore the solvency of medium-sized companies (between 10 and 400 million euros in consolidated turnover) in any sector which, having no viability problems prior to the COVID-19 crisis and being viable in the medium and long term, are being affected by the effects of the pandemic.

In addition, those companies that exceed 400 million euros and justify not having been able to access the SEPI Support Fund, because they do not reach the minimum amount of support provided for in this fund, may also apply for and be beneficiaries of the Cofides Recapitalisation Fund.

  • Maximum total amount to apply for:
    • Large Enterprise: between EUR 4 million and EUR 25 million per beneficiary.
  • Type of instruments:
    1. Equity instruments and/or equity hybrids (participating loans): the minimum amount necessary to ensure viability and not to improve the capital structure at 31/12/19 (measured as Equity / Net Financial Debt).
    2. Other additional credit facilities (normally ordinary loans): the most favourable amount for the company resulting from (i) 2 x annual wage costs 2019, (ii) 25% total turnover figure 2019
  • Term:
    • Equity instruments and/or equity hybrids: maximum 8 years (up to 2029)
  • Remuneration (margin):
    • Equity instruments and/or equity hybrids:
Beneficiary typeYear 1Year 2 and 3Year 4 and 5Year 6 and 7Year 8 ff
SMEs2.25%3.25%4.50%6.00%8.00%
Large companies2.50%3.50%5.00%7.00%9.50%
  • Other complementary credit facilities:
Beneficiary typeYear 1Year 2 and 3Years 4, 5 and 6Minimum
SMEs0.25%0.50%1.00%6.00%
Large companies2.50%3.50%5.00%7.00%

Such aid may be granted until 30 June 2022.

In the next post we will detail the eligibility criteria.

The EU Next Generation Plan and its implementation in Spain

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To address the severe crisis caused by the Covid-19 pandemic, the European Union proposed a temporary recovery instrument, the Next Generation EU Plan, endowed with €750 billion. This historic amount will be channelled to member states in two tranches: €390 billion in grants and €360 billion in loans.

These funds aim to rebuild the European economy after Covid-19 and make it more sustainable, digital and resilient. Spain has the option of accessing 140 billion euros, of which 72 billion will be non-refundable. For the time being, the Spanish government will only ask for these 72 billion euros allocated in direct aid. The mobilisation of these funds will be concentrated in just three years, in the period 2021-23, in order to maximise their impact on the rapid reconstruction of the economy, while the loans will serve to complement, subsequently, the financing of the projects underway. In addition to all these funds, €79 billion will be provided by the structural funds and the Common Agricultural Policy for 2021-27.

Spain will distribute Recovery Plan funds in three ways:

  • The Strategic Projects for Economic Recovery and Transformation (PERTE): a new form of public-private collaboration that identifies structural projects with a great capacity to boost growth, employment and competitiveness of the Spanish economy. The first PERTE to be published is the Electric and Connected Vehicle.
  • Subsidies, for the financing of public assets, through competitive calls for proposals. They require public-private financing.
  • Contracts, for the financing of public assets, through tenders. Financing can be 100% public or public-private (concessions).

In July 2021, the Council of Economic and Finance Ministers (ECOFIN) definitively approved the Spanish Recovery Plan, and a few weeks later the Spanish government received the first €9 billion. Among the many specific measures included in the Recovery Plan are to digitise more than one million SMEs, support more than 3,000 companies in their internationalisation, train more than 2.6 million people in digital skills and deploy plans to promote female talent, or install more than 240,000 interactive digital classrooms.

How will Covid-19 public financing be renegotiated with the banks?

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Last May 2021, the Secretary of State for the Economy and Business Support approved the Code of Good Practice for the renegotiation of financing guaranteed by public entities (ICO, CESCE or CERSA) on the occasion of the Covid-19 crisis.

Thus, companies that received aid in the form of bank financing guaranteed by these public entities will have the possibility to apply for one of the 3 measures made available to them:

  1. Extension of ICO loans: for two more years, so that the maximum term for loans of less than €1.8 million will be 10 years, and for loans of more than €1.8 million it will be 8 years. This extension will be mandatory for banks in cases of a decrease in sales of more than 30% in the period 2020 compared to 2019, and only optional if the decrease in turnover is less.
  2. Conversion of the financing into a shareholder loan, with maintenance of the public guarantee: in this case, a decrease in turnover of more than 30% is mandatory and the company must also have recorded losses in 2020. The refinancing of the guaranteed debt will be binding for all banks, when more than 50% of the guaranteed nominal amount supports it.
  3. As a measure of last resort, the reduction (write-down) of the principal of the financing by means of transfers by the State.

All these modalities will be implemented in the framework of an agreement to renegotiate the debt of all banks, making their best effort to include both the secured and unsecured part, generated between 3/17/20 and 3/12/21.

One or more measures may be implemented at the same time or successively. In order to coordinate the whole process between the various financial institutions, it has been stipulated that the bank with the highest risk ICO will be the coordinator of all the banks, and the company must contact it. Tranches 1 and 2 must be communicated to ICO before 12/1/21, and tranche 3 before 12/1/22. Debt secured by collateral or guarantors is excluded from these coordination rules.

Another very important point to bear in mind is that, if any of these three modalities are used, the banks undertake to maintain the working capital lines until 12/31/22. And as far as the refinancing of the non-guaranteed debt is concerned, the unanimity of all the financial institutions will be necessary.

For more details on the eligibility criteria and how the whole process works, please contact us. At Altria Corpo we can handle all these procedures and negotiations with financial institutions, as well as look for all kinds of additional financing solutions from among the more than 100 alternative financing providers to which we can provide access.