bob Green Hydrogen Financing Scheme

Sources of Equity

Promoters’ / Sponsors’ contribution in the project cost shall be at least 10% in the form of equity.

Remaining Promoters’ / Sponsors’ contribution in the project cost in the form of Quasi equity/ Subordinated Loan/ Optionally Convertible Debentures (OCDs)/ Non-convertible debentures (NCDs) is subject to the following:

1. The Compulsorily Convertible Debentures (CCDs)/ Optionally Convertible Debentures (OCD) shall have the tenor longer than the Bank’s facility.
2. The ROI proposed on CCD/OCD will not be higher than the rate of interest by our Bank at any point in time. Interest on CCD/ OCD shall be paid only after meeting all the debt obligations towards bank finance.

Indicative stipulations for Promoters’ / Sponsors’ contribution in the form of Quasi equity/ Subordinated Loan/ OCDs/ NCDs shall satisfy the following stipulations:

• It shall be subordinated to the lender in terms of payment of interest and principal.
• Promoter/ Sponsor to undertake to not transfer to any other entity or withdraw without lender’s approval.
• Shall not have any charge/ recourse to the project assets including the cash flows.
• No voting rights to the holders in any annual general meeting/ extra ordinary general meeting of the Borrower Company.

Any dividend/ interest/ coupon shall be paid out of distribution funds left in Escrow/ TRA after meeting all reserve requirements and debt obligations and with prior permission of RTL lenders.

Maximum Limit

Rs.500/- Crores *

*However, on case-to-case basis bank may decide to enhance the amount on merits and at its sole discretion.

Moratorium

As per the implementation schedule but not more than -3- years.

Security

Following indicative aspects of security cover should be explored depending on creditworthiness of the borrower:

• Mortgage on entire immovable properties of the project financed.
• Hypothecation of entire movable assets of the project financed by the Bank, including movable plant & machinery, machinery spares, tools and accessories, furniture and fixtures, vehicles, raw material, stock in trade, inventory, and all movable properties whatsoever in nature.
• Charge on entire intangible assets of the project.
• Charge on entire cashflows, receivables, book dues and revenues of the project, of whatsoever nature and wherever arising, both present and future.
• Charge on the Trust and Retention Account (TRA), Debt Service Coverage Account, Escrow Account and other reserves and other bank accounts of the Project, wherever maintained.
• Any other security as deemed necessary by the bank.

Additional Securities: Following additional security measures may be stipulated, to the satisfaction of the Bank:

• Pledge of the shares of the applicant company.
• Corporate Guarantee/ Personal Guarantee.
• Insurance wherever available.

Minimum FACR of 1.25x to be ensured.

Debt Service Reserve Account (“DSRA”)

Equivalent to one (1) successive quarter’s term debt service obligations (principal + interest) will have to be created mandatorily and shall be continued till repayment of the entire debt.

TEV Study

The TEV Study to be carried out as per bank’s guidelines.

Covenants

The following arrangements should be maintained:

• Binding ‘take or pay’ contract with the buyer.
• Corporate guarantee or shortfall undertaking by promoter/sponsor.

Contract should preferably incorporate pricing formula (preferably fixed in nature) for the entire tenor of the contracts, with the suppliers of the renewable energy requirement as well as with the purchasers of Green Hydrogen for a period of minimum of 12 years should exist.

Financial Covenants:

• TOL / ATNW - less than or equal to 3.0
• Total Debt/EBITDA - less than or equal to 4.5
• Current Ratio - greater than or equal to 1.00
• Interest Coverage Ratio - greater than or equal to 2.00
• Min. DSCR/ Avg. DSCR - 1.15:1/ 1.30:1

Internal Rate of Return (IRR)- 12-14 % (as per the existing market trend).

*Bank may provide relaxation on above parameters on case-to-case basis on merits and its sole discretion.

Rating

Internal Rating –As per bank’s guidelines.

External Rating – A and above

In case of SPV/ SPEs being financed under the scheme, the sponsor should be rated A & above.

Key Regulatory Approvals/Clearance required

• Consent to Establish (CTE) and Consent to Operate (CTO) from the respective State Pollution Control Board (SPCB).

• Specific approval regarding Water Procurement.

• No Objection Certificate from the Fire Department.

• Environmental Clearance from the concerned regulatory body.

• Registration under the Factories Act.

• Approval from the Petroleum and Explosive Safety Organization (PESO).

• Other site and sector specific approvals/clearance.