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07 February 2022
press release

Bulgaria: Schoenherr advises RGREEN INVEST on unique EUR 15m green bond to finance photovoltaic plant in Bulgaria

Schoenherr advised RGreen Invest, a French management company representing a fund for green energy projects, on a EUR 15m bond to finance the construction of a photovoltaic plant near the town of Razlog in southwestern Bulgaria, as well as on a standard security package for it. The bond's issuer is a member of the Renalfa group, a leading Bulgarian clean energy and e-mobility provider with a focus on renewable energy generation assets.

The transaction enables RGreen Invest to further expand its footprint throughout Europe, following the company's strategy of providing long-term support for developers of renewable energy projects. At the same time, the bond represents a legal novelty in several respects.

First, it was documented under a Bulgarian law agreement that was purportedly the first one to fully follow the LMA model Subscription Agreement for use in pan-European private placements. There are many domestic formalities for materialised bonds that need to be reflected, but they do not change the business logic under an LMA model and simply require some special language to comply with the specifics of Bulgarian law. The approach thus makes it possible to document bonds under Bulgarian law in a legally and financially sophisticated manner familiar to foreign lenders. Moreover, since drafting a Bulgarian bond is much simpler than drafting a Bulgarian credit agreement when both are based on the respective LMA models, the approach adopted in the particular transaction is less costly for borrowers, who normally pay all legal costs.

Second, although the prevailing market practice in Bulgaria is to issue dematerialised bonds even in cases of private placements, this bond was again ostensibly the first one issued in paper (materialised) form. Certain domestic corporate registry formalities, which are regarded as easier to complete when having dematerialised bonds, were smoothly passed through in this paper bond scenario. Ultimately, this was a time- and cost-effective approach, eliminating the expenses and procedures required for issuing and maintaining dematerialised bonds with the Central Depository.

"We are happy that this transaction was completed smoothly and is, in a certain sense, paving the way for international investors by illustrating a simplified private placement of bonds under Bulgarian law following established international standards," said Tsvetan Krumov, head of Schoenherr Bulgaria's banking, finance & capital markets practice group.

RGreen Invest is a French company that manages a number of alternative funds specialised in the financing of green projects. Among the first to offer a full range of flexible financing solutions tailored to entrepreneurial needs, RGreen Invest has made it its mission to rethink finance as a key catalyst of the energy transition and climate change adaptation. With more than EUR 1.4bln under management to date, RGreen Invest has financed projects in France and across Europe equivalent to an installed capacity of more than 3.3 GW, thus avoiding nearly 550,000 tons of CO2 emissions per year (based on an internal calculation for 2020).

The Schoenherr team was led by Tsvetan Krumov (head of Schoenherr Bulgaria's banking, finance & capital markets practice group, attorney at law) and included Kristina Lyubenova (attorney at law) and Milena Gabrovska (attorney at law).

This was the second renewables project financed by a bonds issue that the Schoenherr team in Bulgaria advised on in the past months, the previous one being documented under Austrian law with a security package under Bulgarian law.