Government green-lights €39 million Porto Franco loan

The under-construction Porto Franco development.
The under-construction Porto Franco development. Source: Anna Aurelia Minev/ERR

The government gave the go-ahead for the loan, which Porto Franco applied for as a result of the coronavirus pandemic, following a four-day cabinet session. The loan had met with controversy, as it utilizes state credit agency KredEx and funds intended for businesses demonstrably hit by the coronavirus pandemic.

Porto Franco's development has been delayed for several years for various reasons, with construction work has now largely suspended. 

Rauno Teder, CEO of Porto Franco, says work would recommence as soon as a loan was received from the state. 

The loan met with controversy last month as other real estate developers claimed the €39.4 million loan, chaneled via state agency KredEx, constituted illegal state aid, since the project was not finished and thus not generating turnover.

Porto Franco had already signed a € 102 million loan agreement with the European Bank for Reconstruction and Development (EBRD) and Estonian bank Luminor a few weeks before the government imposed the coronavirus emergency situation order.

Prime Minister Jüri Ratas (Center) rejected this, however, saying it would start yielding benefits from next year in terms of revenues, taxation and employment, and that this was clear even before the coronavirus pandemic began.

While the loan's term is reported at six years, Porto Franco says that it intends to repay it after obtaining bank loans, making it in effect a bridge loan.

Loan details

  • Issuer: KredEx.
  • Term: Six years.
  • Interest: 12-month Euribor plus 2 percent per annum.
  • Contract fee: 0.2 percent of loan limit amount.
  • Limit can be used in installments between €5 million and €15 million.
  • Secured by remortaging on real estate at Laeva tn T6, Laeva tn 1, Kuunari tn 1 and Kai tn 4.

The project is planned to cover over 150,000 square meters, in the immediate vicinity of the harbor area, and will house residential, office and business tenants.


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Editor: Andrew Whyte

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