COBALT advised Alexela, the leading energy group of Estonia, on taking a loan of 37 million euro from the Sihtasutus KredEx, a financing institution established by the Estonian Ministry of Economic Affairs and Communications.
The loan was granted by SA KredEx to Alexela Varahalduse AS, the holding company of Alexela Group, pursuant to the decision of the Government of the Republic and in accordance with the State aid Temporary Framework of the European Commission within the context of the outbreak of COVID-19. The loan which was granted enables Alexela, among other things, to maintain more than 500 jobs in Kiviõli Keemiatööstus, a company belonging to Alexela group, which in turn means that the living conditions of more than 1500 persons, in terms of households, will be maintained by Kiviõli Keemiatööstus as the biggest employer in Kiviõli.
Andreas Laane, CEO of Alexela Group, welcomed the maintenance of jobs in his comment. “What makes us most happy is knowing that as an employer in Lüganuse municipality, Ida-Virumaa, we’ll be able to maintain the living conditions of many households by maintaining the jobs of our employees. During the first stage when we adapted our lives to the crisis, we were forced to optimize the organisational structure of our group enterprises, and 58 employees were laid off from Kiviõli Keemiatööstus among other employees of the group companies, as it was not possible to maintain their jobs. For me as a CEO, the decisions on lay-offs are always painful. With the aid from the state, we will still be able to look towards the future with Kiviõli Keemiatööstus, and to keep up the normal life in Lüganuse municipality,“ said Laane.
The CEO of Alexela Group added that Alexela paid well above 100 million euros of taxes to the state each year, and Kiviõli Keemiatööstus alone paid almost 10 million euros of various taxes to the state, and therefore 37 million euros of loan money would be a reasonable amount for the state, as the state would retain its tax income, and in addition, the loan would be returned not later than in five years.
According to Ivo Kuldmäe, the chief of KredEx, it is important to help businesses everywhere in Estonia, and to provide them with support to overcome the difficulties caused by the corona crisis, but also to make new investments. „Together with the crisis measures, we have made over 452 million euros available to 778 undertakings since March. The money has been spent on overcoming difficulties caused by the coronavirus outbreak, but also on investments which are necessary for the development of businesses,“ said Kuldmäe.
“The key to tackling a crisis is always cooperation, and therefore companies, banks and the state must work together to overcome the difficulties and to realise new potential. The loan granted to Alexela enables to maintain over 500 jobs in Ida-Virumaa, constituting almost one-third of all the employees of the group, which makes it a good example of such cooperation,“ he added.
„On behalf of entire Alexela Group and the employees of Kiviõli Keemiatööstus, I am grateful to the state and to the project team of KredEx for the smooth process of the negotiations, for the loan granted and for quickly tackling all the unexpected issues that came into light during the conclusion of the loan contract,“ added Andreas Laane, CEO of Alexela Group, to the words of Ivo Kuldmäe.
The COBALT team which included partner Marina Kotkas, senior associate Mattias Tammeaid and assistant lawyer Christine Mägi, advised the client on all issues related to the transaction, including preparation of the transaction documents and negotiations with SA KredEx.