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Spain grants Genesis Energy interest-free loan

Genesis Energy, a Hungarian company that is building solar panel plants in Hungary, Spain and Singapore, said Monday that Spain’s Industry Ministry has organized an interest-free credit line to cover one-quarter of the cost of a solar panel plant it is building in Andalusia.

The loan -- for ten years with a five-year grace period -- is for €4.5 million in 2008, but the company can draw on loans with similar conditions in 2009 and 2010, though the total amount borrowed may not exceed €15 million. Genesis Energy said the loan is a “temporary alternative” for an equity raise as long-term investors could be involved in the current global environment only at unfavorable terms, which could cause a disproportionate drop in the stake of existing shareholders. Talks are underway on a guarantee -- necessary to draw on the loan -- from a Spanish bank, Genesis Energy said. It also said, that the US Export-Import Bank had extended earlier letters of intent on a guarantee for the purchase of equipment from the US for the plant until it was able to organize financing.

The Spanish unit’s project now has reached a stage where the company can start drawing on the €21 million in non-refundable subsidies the Spanish government earlier awarded to build the plant. Genesis Energy said construction on the plant in Spain could begin, which would have a favorable effect on its share price and trading volume. The company also said it could result in the “realization” of an agreement with GEM Global Yield Fund (GEM).

Genesis Energy shareholders approved at an EGM in January a conditional capital raise of at most Ft 1.75 billion, at nominal value, through the issue of convertible bonds to be subscribed by GEM. The EGM authorized the board to issue over a period of as long as three years a single series of at most 3.5 million convertible bonds to be subscribed by GEM at a price of €1 (Ft 258) apiece by GEM. The EGM also authorized the board to issue a maximum of 3.5 million shares, with a nominal value of Ft 500 apiece, or a total of Ft 1.75 billion. Genesis Energy did not reveal at the time the ratio at which the bonds may be converted or the run of the bonds. Genesis Energy now said it mandated CIB Bank to organize the convertible bond issue. Genesis Energy shares, which are listed in the B category of the Budapest Stock Exchange, were trading at 2125 around 1030 on Tuesday, up 2.16%. (MTI-Econews)