KredEx not planning to retain most collateral in event of loan defaults ({{contentCtrl.commentsTotal}})

KredEx logo. Source: (Postimees/Scanpix)

State-operated credit provider KredEx may end up owning several companies after the current coronavirus crisis ends, as collateral is offered as loan guarantees. KredEx however says it will only go down this route in the most extreme cases, and will in the first instance aim to find a buyer for assets received rather than retain them themselves.

The foundation has seen a lot of activity since the crisis began in early March, with companies losing income and business applying for loans.

It offers working capital loans, investment loans and loan guarantees to companies in trouble during the crisis, but says it has no ambitions to become a real estate management company or restauranteur or similar, or to take on large amounts of property as happened with some banks following the economic crisis starting in 2008.

By the end of last week, Kredex had received 78 loan applications for extraordinary working and investment loans to a total amount of €192.8 million, the lion's share of which was Tallink's application for €150 million.

"KredEx finances companies with the presupposition that we will never actually have to own them," KredEx spokesperson Joonas Kerge told ERR Thursday.

"A guarantee given by a company is an extreme way to protect the rights of a lender, which responsible to lenders only exercise in extreme situations," he went on

A business plan submitted by a company to Kredex must stipulate ways the concern might be brought out of its difficulties going forwards. 

Financial forecasts for the next three years and an annual report for the previous financial year must also be submitted.

Winding-up procedures following KredEx loans must take into account how the situation has arisen and what proportion of property constitutes a forced sale. 

"Given our potential resources, it is not realistic for KredEx to become a large real estate management company in the short term, as every bank did during the previous crisis," said Kerge.

Services for companies in the accommodation and catering sector, travel agencies and tour operators are also being considered by KredEx.

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Editor: Andrew Whyte

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