A novel hybrid financing has been used to address the demand
risk arising from a rare merchant power deal.
The sponsors of Greece’s Heron II power
project, GEK Terna and GDF Suez secured a €200
million senior loan from a consortium of Greek banks and
European Investment Bank (EIB). But with no obvious offtaker
and forecasts of dwindling electricity consumption following
the country’s financial crisis, the banks demanded
a high level of comfort.
This was achieved by organising the facility as a corporate
loan with the ability to convert to non-recourse at the
"The revenue projections were adversely affected by the
economic crisis," said Euripides Ioannou, a partner with
PotamitisVekris which acted for the sponsors. "To address this
risk, last year we decided on the current structure which had
some elements of sponsor guarantees but would switch to a pure
project finance transaction once certain...