Hello everyone. This is a technical session, that is useful for those of you who want to enter in more details, about what can happen when a covenant is broken, and the subsequent actions that creditors can take in case, that breach of covenant is not material. One of the typical cases that identifies a covenant breach, is the not respect of the minimum debt service coverage ratio. It will certainly remind that the debt service cover ratio is the ratio for every year, where the loan is still alive. Between the unlevered free cash flow: the numerator, and the debt service of that specific year: the denominator. In this session, we will assume to take in to consideration a project, that has already entered the operational phase, and, for which the loan included a covenant that set a minimum debt service coverage ratio of 1.3x. Going back to the previous sessions, you know that 1.3 means that the minimum request of additional cash that creditors require to the SPV is a 30% unlevered free cash flow. More than the debt service of that specific year. We will see, what happens, in case the project in a specific year is not able to respect that level. Of course, it must respect a minimum of absolute value of one, otherwise the project is defaulted. It's really in bankruptcy. But we will assume that in a one specific year, the actual level of debt service cover ratio is below the original agreed debt service cover ratio of 1.3 and we will see what banks can do in order to mitigate this additional level of risk that they are facing. Now. Let's assume that the agent bank is monitoring the borrower. The project has already started and we have entered, already, the first year of the operational phase. So, in our table we have the first year of the first five years of the operational life. That indicates actual, actual means that these are values, that are effectively in place after the first year of the operational phase. The remaining years, from two to five, indicate the forecast that we had done at the time in order to understand if the project was doable or not. Lets assume that in year number 1 the first year of the operational phase, the actual year we have an unlevered free cash flow of 38 and that our forecast expects that this 38 will remain constant for the next 4 years. So we have 38 actual performance and 4 times 38 from year 2 to year 5 future expected performance. We assume that the debt in place at the beginning of year 2 and year 1 is 100. And we expect that the loan will be amortized in 5 years, 20 euros per annum. With a constant interest take of 10%. You can appreciate from the table, that the interest always calculated on the outstanding previous period. Falls linearly from 10 to 8 to 6 to 4 to 2. And then, the debt service will constantly decline during the period from 30, actual value to 28, 26, 24, and 22. The agent bank, based on this values, calculated the debt service cover ratio. So for every year, it is the ratio between the unlevered free cash flow, and the debt service for that specific year. If you calculate these values, you will see that the debt service cover ratio, is 1.27 the first year, 1.36 the second, 1.46 the third, 1.58 in the fourth, 1.73 the third. Now, the point is, let's assume that in our project, we have a minimum request of debt service cover ratio which is 1.3. You can understand that in the first year, the covenant is broken. Because you are at 1.27 while the minimum amount required was 1.3. Now, what can we do? The covenant is broken. So, going back to our session regarding the effect of a covenant breach, the banks perform a materiality test. So, they must decide whether or not this situation is creating some troubles. You can understand that even if I am below 1.3, 1.27 means that cash is there. I'm not insolvent. And in fact, that the leveraged free cash flow, in here, number 1, is 38. And the debt service, originally expected, was 30. So, you have 8, of additional cash. That still represents valuable amount of cash. So, from this point of view, banks typically do not consider this breach of covenant as material; however, you have less cash than expected, and so creditors put some additional measures in action in order to protect their position, their situation in a more stringent way. What can they do? Typically what they do is what is technically defined as a cash sweep. What does it mean? It is a very simple concept. All extra cash that the vehicle has generated in an year when the covenant has been broken, is swept, is captured, is stolen by the creditors, that, in this sense, can accelerate, by a bit, the repayment of the loan. Let's focus on what happens. If we have excess cash for 8, in year number 1. We can increase the debt repayment in that specific year. From a principal repayment of 20, to a total principal of 28. 20, originally agreed, plus 8 cash sweep. In this way, you can recalculate the amortizing schedule of the loan. That starts again from 100. But then falls immediately not to 80 as in the base case but to 72, 52, 32, 12 and 0 at year number 5. You can also appreciate that in the last year the final repayment amount. Will be 12, and not originally expected a repayment of 20. Being the difference, the 8 that has been accelerated at the beginning. So you take away cash at the beginning, and you will have lower level of remaining debt at the end. In this way, you can understand that the debt service cover ratio, at the end of year 1, would be exactly 1 because all the cash has been used to repay creditors. And you can also understand, that since the outstanding amount of the loan, from year two to year five, has been reduced by an amount of 8. That has been swept away. It is obvious that all the other financial ratios will increase for the simple reason that the remaining amount to be repaid would be lower. And so if you recalculate the ratios you can see that in year number two you have 1.40 rather than 1.36. 1.51, rather than 1.46 in year three. 1.64 versus 1.58 in year four, and 2.88 rather than 1.73 in year number five. Bottom line is, I have broken a covenant, the debt service correlation, is this situation material? Not at all. There is still cash. What can I do in order to protect myself? I can sweep away this amount of cash and then block the dividend distribution from the SPV to the shareholders.