The European Bank for Reconstruction and Development (EBRD) and the mayor of Bosnia's second largest city Banja Luka signed a mandate letter on the operational and financial restructuring of local district heating company Toplana, under which it will receive a much needed 15 million euro ($17 million) cash injection, the municipal government said.
The contract also includes investments in the modernisation of the heating infrastructure and the partial write-off of existing debts, the city government said in a statement.
The 15 million euro loan will be provided in two tranches - of 10 and 5 million euro - with a repayment period of 15 years, a grace period of up to three years and an interest rate of 1%.
The first tranche of the loan is intended for the purchase of new biomass boilers, while the second will go towards refinancing bonds.
Toplana ended 2015 with a net loss of 2.9 million marka ($1.7 million/1.5 million euro), down from 5.6 million marka a year earlier.
Banja Luka is located in the northwestern part of Bosnia's Serb Republic.
The Serb Republic is one of the two autonomous entities that form Bosnia and Herzegovina. The other one is the Muslim-Croat Federation.
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