ERS eyes loan, capital increase to secure funds for HPP Dabar, HPPs on Bistrica river

After a new tender for a loan to finance the construction of hydropower plants on Bistrica river, power utility Elektroprivreda Republike Srpske (ERS) also prepared a new proposal for the capital increase of its subsidiary Hidroelektrane na Trebišnjici (HET) to secure money for the construction of the 160 MW Dabar hydropower plant.

The projects for hydropower plants on Bistrica river with a combined capacity of 39 MW and the Dabar HPP were launched by Elektroprivreda Republike Srpske, but the company is struggling securing money for their construction. The previous tender for a loan for HPP Dabar and HPPs on Bistrica was not successful, and the first proposal for the capital increase of HET was not accepted by the shareholders’ assembly.

ERS is also planning to secure funds by issuing bonds on the Vienna Stock Exchange.

The value of the capital hike was reduced from the original EUR 218 million to EUR 143 million

The new proposal for a capital increase, to be discussed by the shareholders’ assembly on February 26, envisages EUR 143 million worth of shares to be issued, a cut from EUR 218 million planned by the first proposal. Also, the price at which the existing shareholders of HET can buy them was boosted to 23 euro cents from 15 euro cents.

Of note, the largest shareholders of HET are ERS (65%), the Pension Reserve Fund Management Company of the Republic of Srpska (10%), investment fund management company Kristal Invest (5,3%), and the Republic of Srpska Restitution Fund (5%). Except Kristal Invest, they are all owned by the Government of the Republic of Srpska.

If they do not use their preemptive right, the remaining shares will be the subject of a public offer on the Banja Luka Stock Exchange.

The share price for existing shareholders was increased from 15 euro cents to 23

Similar to the first proposal, the new one was met by objections from small shareholders that their shares would be devalued.

Of note, the National Assembly of the Republic of Srpska has recently adopted amendments to the law on the securities market. During the debate in the parliament, it could be heard that the law was changed for the HET capital increase, in order to prevent shares from being bought by private companies.

The contract on the construction of HPP Dabar was signed with China’s China Gezhouba Group Co., while the contractor for the HPPs on Bistrica river is China’s AVIC-ENG – China National Aero-technology International Engineering Corp.

ERS is looking for a EUR 15 million loan

The second tender for finding a bank that will lend EUR 15 million to ERS is underway, portal eKapija reported.

With the loan, ERS intends to finance the construction of the HPPs on Bistrica river, according to the tender documentation.

The loan repayment period is one year, with a fixed interest rate of up to 2.95 percent, and a fee for loan approval of up to 0.3 percent of the loan value.

The estimated value of the procurement is EUR 290,000. A loan was not in the procurement plan for 2021, and the deadline for submitting bids is March 4.