Government approves new loans for HAC motorways operator

At its session on Thursday, the government forwarded a bill into parliament confirming a guarantee agreement between the Republic of Croatia and the European Bank for Reconstruction and Development (EBRD) to finance the restructuring of the state-owned motorways operator HAC and approving a new loan of 200 million euros.

The guarantee agreement refers to a loan of EUR 250 million for a period of 15 years and a 2 year grace period which was signed in late March by Finance Minister Zdravko Maric and EBRD Director for Croatia Vedrana Jelusic Kasic.

The bill requires the government, as the guarantor for the EBRD loan, to provide an unconditional guarantee as the principal debtor and not just as a guarantor that it will duly pay its dues and will regularly execute all other obligations of HAC.

In order for HAC to be in a position to cover its loan obligations falling due this year, the government will give its permission for HAC to take out two loans of 100 million euro each that will be guaranteed by the state.

HAC will take the loans for a period of eight years with a four-year grace period and four-year repayment period with an effective annual interest rate of 4.2% and a state guarantee as collateral for the entire amount of the loan.

Maritime Affairs, Transportation and Infrastructure Minister Oleg Butkovic explained that this year EUR 466 million of principal and EUR 124 million of interest fall due, or a total of EUR 590 million which needs to be re-scheduled.

HAC is obliged to secure EUR 400 million in order to finance its business operations in 2016. HAC plans to secure EUR 200 million from the EBRD loan and the remaining EUR 200 million from the two new loans from a group of Croatian banks.

In addition, the state's road authority - Hrvatske Ceste (HC) - too will take a loan of EUR 89 million to finance the construction and maintenance of state roads and to settle its loan liabilities maturing this year. The government will also go as guarantor for this 10-year loan.

Butkovic said that a significant amount falls due for this loan in the amount of more than HRK 1.8 billion, HRK 1.4 billion accounting for principal. Of that loan, HRK 588 million will be used to settle the liabilities due and the remainder will go towards investment projects.

HAC and HC, as well as a few other public companies, will be excluded from a government decision defining the amount, method and schedule of profit generated by strategic companies to be paid into the state budget, Finance Minister Zdravko Maric said.

Pursuant to the government's decision, the said companies are required to deposit 60% of last year's net profit directly into the state budget with the exception of the Alan defence industry agency which is required to pay its entire profit, which will then be used for the upgrade of the Croatian Armed Forces, Minister Maric said.

Last update: Thu, 12/05/2016 - 19:24

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