| LOAN GUARANTEE INSTRUMENT FOR TEN-TRANSPORT PROJECTS |
| Community contribution | | 1. | Without prejudice to the adjustment procedure from 2010 onwards as set out in paragraph 2, the contribution from the general budget of the EU to the loan guarantee instrument shall be made available to the EIB in accordance with the following schedule:
| 2007 | EUR 10 million | | 2008 | EUR 35 million | | 2009 | EUR 60 million | | 2010 | EUR 80 million | | 2011 | EUR 105 million | | 2012 | EUR 110 million | | 2013 | EUR 100 million |
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| 2. | In years 2007 to 2009 the Commission shall pay EIB the annual amounts as scheduled above. From 2010 onwards EIB shall request the transfer of sums up to the cumulated amount indicated in the schedule to the trust account. The request shall be issued by 31 December of the preceding year and shall be supported by a forecast of the need for the scheduled Community contribution. This forecast shall serve as the basis for a demand-based adjustment of the annual payments indicated above, which shall be decided in accordance with the procedure referred to in Article 15(2). |
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| Trust account | | 1. | The EIB shall set up a trust account to hold the Community contribution and revenues resulting from the Community contribution. |
| 2. | The interest earned on the trust account and other revenues resulting from the Community contribution, such as guarantee premiums, interest and risk margins on sums disbursed by the EIB, shall be added to the resources of the trust account, unless the Commission decides, in accordance with the procedure referred to in Article 15(2), that they are to be returned to the TEN-T budget line. |
| 3. | Sums drawn for capital allocation shall be reimbursed to the trust account after the amounts disbursed by the EIB under the loan guarantee instrument are fully reimbursed. |
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| Use of the Community contribution | The EIB shall use the Community contribution:
| — | to carry out, for each eligible project, the expected loss provisioning and capital allocation, in accordance with the relevant rules of the EIB and a risk assessment performed by the EIB under its applicable structured finance facility policy, |
| — | to cover any non-project-related eligible cost associated with the establishment and administration of the loan guarantee instrument. These costs shall be defined in the management agreement between the Commission and the EIB. |
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| Risk sharing | | 1. | The Community contribution shall be used by the EIB to carry out, for each eligible project, the expected loss provisioning and capital allocation. |
| 2. | The expected loss provisioning shall cover the expected loss of a project. The part of the Community contribution covering the statistically expected loss provisioning for each eligible operation shall be paid from the trust account to the EIB, thus covering a percentage of the risk. This percentage shall be variable and depend on the risk grading of the operation as well as its maturity. |
| 3. | The capital allocation shall cover the unexpected loss of a project. The part of the Community contribution corresponding to the capital allocation shall be earmarked in the trust account for each underlying operation. This amount may be claimed by the EIB in the event of the call of the guarantee issued by EIB under loan guarantee instrument, thus covering an additional percentage of its risk. |
| 4. | The risk-sharing pattern resulting from the above mechanism shall be reflected in an appropriate sharing between the trust account and the EIB of the risk margin charged by the EIB to its counterpart under the underlying loan guarantee instrument operation. |
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| The EIB guarantee | | 1. | The loan guarantee instrument shall consist of an EIB guarantee for a stand-by liquidity facility to be provided to an eligible project in terms consistent with the loan guarantee instrument. |
| 2. | If the stand-by liquidity facility providers are entitled to call the EIB guarantee under the terms of the loan guarantee instrument, the EIB shall pay out all sums due to the stand-by liquidity facility providers and become creditor to the project. |
| 3. | Once the EIB has become creditor to a project, the EIB's rights under the loan guarantee instrument shall rank behind the debt service of the senior credit facility and ahead of equity and related financings. |
| 4. | The stand-by liquidity facility should not exceed 20 % of the total amount of the senior debt committed at financial close. |
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| Pricing | The pricing of guarantees under the loan guarantee instrument, based upon the risk margin and the coverage of all administrative project-related costs of the guarantee instrument, shall be determined in accordance with relevant usual rules and criteria of the EIB. |
| Application procedure | Applications for risk coverage under the loan guarantee instrument shall be addressed to the EIB in accordance with the EIB's standard application procedure. |
| Approval procedure | The EIB shall carry out risk, financial, technical and legal due diligence and shall decide the issuance of a guarantee under the loan guarantee instrument in accordance with its usual rules and criteria, including, inter alia, the quality of individual proposals, the creditworthiness of the borrowers, acceptable terms and conditions and market demand. |
| Duration of the loan guarantee instrument | | 1. | The Community contribution to the loan guarantee instrument shall be committed at latest by 31 December 2013. The actual approval of guarantees is to be finalised by 31 December 2014. |
| 2. | In the event of termination of the loan guarantee instrument during the current financial framework any balances on the trust account, other than funds committed and funds needed to cover other eligible costs and expenses, shall be returned to the TEN-T budget line. If the loan guarantee instrument is not extended into the next financial framework, any remaining funds shall be returned to the revenue side of the general budget of the EU. |
| 3. | Funds allocated to the loan guarantee instrument may be called upon until the last guarantee expires or until the last subordinated debt has been reimbursed, whichever is earlier. |
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| Reporting | Annual reporting methods on the implementation of the loan guarantee instrument shall be agreed between the Commission and the EIB. |
