🔐 GFF Workshop Presentation

December 10, 2025 | UNDP-BHU-MAF

Incorrect password. Please try again.

Green Finance Facility (GFF)

Bhutan Bundled Rooftop Solar Program

78 MW
PORTFOLIO
EUR 36.7M
TOTAL INVESTMENT
50/30/20
CAPITAL STACK
UNCDF
FLG ADMIN

December 10, 2025 | Thimphu, Bhutan | UNDP-BHU-MAF

Workshop Agenda

OVERVIEW

1. Capital Stack 4.0

50/30/20 Structure – Bank, GFF, RESP

2. UNCDF FLG Administration

First-Loss Guarantee ownership and activation

3. BTF Mezzanine Structure

Preferred equity, not lending

4. Cash Flow Waterfall

Payment priority and distribution

5. BDB Escrow Mechanism

Payment security architecture

6. 25-Year Financial Model

Returns, DSCR, sustainability

7. Discussion

Bank confirmation on cash-flow lending

2 / 18

Capital Stack 4.0: 50/30/20

STRUCTURE
Layer Share Amount Rate Institution
Senior Debt 50% EUR 18.3M 8.5% BDB + Bank Club
GFF Mezzanine 30% EUR 11.0M 2.5% pref BTF
RESP Equity 20% EUR 7.3M 13-16% IRR RESP
Total 100% EUR 36.7M ~78 MW

SPC Flexibility

Portfolio average 50/30/20

  • High-CF sites: Banks up to 70%
  • Low-CF sites: GFF up to 40%
  • Optimizes GFF deployment

FLG (Outside Stack)

EUR 1.5M First-Loss Guarantee

  • Owned & administered by UNCDF
  • RMA acts as custodian only
3 / 18

Capital Stack Visualization

VISUAL
SENIOR DEBT 50%
EUR 18.3M
8.5%
GFF MEZZANINE 30%
EUR 11.0M
2.5% pref
RESP EQUITY 20%
EUR 7.3M
13-16% IRR
FLG EUR 1.5M
UNCDF Owned

Key Metrics

  • Total: EUR 36.7M
  • Capacity: ~78 MW
  • Leverage: 2.9x MAF
  • Commercial: 2.3x GFF

Within-Stack Leverage

50% debt, 50% equity

Balanced structure ensures bankability while maintaining equity cushion

4 / 18

UNCDF FLG Administration

CRITICAL
  • FLG is OWNED and ADMINISTERED by UNCDF
  • RMA acts as CUSTODIAN/AGENT only
  • EUR 1.5M ring-fenced, segregated account
  • UNCDF makes all activation decisions
  • Unused FLG returns to UNCDF at programme closure

UNCDF Role

  • Legal owner of FLG funds
  • Makes all activation decisions
  • Sets investment guidelines
  • Receives unused funds at closure

RMA Role (Custodian)

  • Maintains segregated account
  • Executes UNCDF instructions
  • Quarterly reporting to UNCDF
  • 0.10-0.15% admin fee
5 / 18

Loss Absorption Hierarchy

RISK
1st
RESP Equity (20%)
EUR 7.3M - First loss from project perspective
2nd
GFF/BTF Mezzanine (30%)
EUR 11.0M - Subordinated to debt
3rd
Senior Debt (50%)
EUR 18.3M - Senior secured position
4th
FLG (Outside Stack)
EUR 1.5M - ONLY triggers if senior defaults

FLG Activation

FLG ONLY activates if:

  1. Senior lender declares default (>90 days past due)
  2. RESP equity exhausted
  3. GFF/BTF equity exhausted
  4. Senior debt at risk

Probability: <5% based on stress scenarios

6 / 18

BTF Mezzanine Equity Structure

BTF
  • BTF is a TRUST FUND, not a bank - cannot lend
  • Invests EUR 11.0M as subordinated preferred EQUITY
  • 2.5% annual preferred distribution (EUR 275k/year)
  • Covers BTF operational costs from Year 1
  • Capital redeemed Years 4-12, recycled into new projects

Return Mechanism

  • 2.5% preferred distribution
  • EUR 275k/year (semi-annual)
  • Payment: After debt, before RESP
  • Terminology: "distribution" not "interest"

Capital Redemption

  • Years 1-3: Lock-up period
  • Years 4-12: ~EUR 1.22M/year redemption
  • Year 12: Full redemption complete
  • Redeemed capital → new projects
  • Creates revolving fund (200+ MW)
7 / 18

Cash Flow Waterfall

PRIORITY
1
Senior Debt Service P+I (8.5%) to banks
2
DSRA Replenishment 6 months debt service coverage
3
GFF Preferred (2.5%) EUR 275K/year to BTF
4
GFF Redemption (Yr 4-12) ~EUR 1.22M/year capital return
5
RESP Equity Returns Residual cash to developers

Waterfall Logic

Priority order ensures:

  1. Banks get full debt service first → Commercial bankability
  2. DSRA buffer for volatility → 6 months coverage min
  3. GFF receives 2.5% preferred → Covers BTF costs
  4. GFF capital recycled → Enables revolving fund
  5. RESP gets remaining cash → Target 13-16% IRR
8 / 18

Escrow Mechanism

SECURITY
  • A Bhutanese Bank as Escrow Agent
  • BPC pays to segregated escrow account (not SPV directly)
  • Escrow Agent executes monthly waterfall distribution
  • Uses standard NEFT/BIRT for fund transfers
  • Monthly reporting to all stakeholders

Monthly Payment Cycle

Day 1-5:BPC receives meter data
Day 6-15:BPC verifies & pays to escrow
Day 16-25:Escrow distributes per waterfall
Day 26-30:Reporting to all parties

Distribution Priority

→ Senior debt first

→ Then GFF preferred

→ Then RESP residual

FLG backstop if 90+ days default

9 / 18

25-Year Cash Flow Model

MODEL
Period Debt Service GFF Dist. RESP Cash Notes
Years 1-3 EUR 1.5M/yr EUR 0.28M Minimal GFF preferred only
Years 4-12 EUR 1.5M/yr EUR 1.5M Growing GFF + redemption
Year 12 Final payment Final redemption Full Debt cleared
Years 13-25 0 0 Maximum Equity phase

Model Assumptions (78 MW)

  • Total CAPEX: EUR 36.7M
  • Annual Revenue: ~EUR 5.4M (Year 1)
  • Annual OPEX: ~EUR 0.55M (1.5%)
  • Tariff: BTN 4.5-5.0/kWh (ERA 2025)

RESP IRR

  • Years 1-12: Constrained by debt
  • Years 13-25: Maximum returns
  • Full 25-year IRR: 13-16%
  • Depends on site portfolio CF
10 / 18

Debt Service Coverage Ratio

ANALYSIS
1.61x
DSCR Year 1 | Strong Coverage

Coverage Metrics

  • Min DSCR: 1.45x
  • Avg DSCR: 1.58x
  • Covenant: 1.20x

Headroom 25%+ Above Covenant

Distribution lock-up below 1.2x

DSCR Analysis Notes

  • DSCR = EBITDA / Debt Service (principal + interest)
  • 50% gearing provides strong coverage buffer
  • GFF subordination ensures senior debt always covered first
  • RESP distributions blocked if DSCR <1.2x (covenant protection)
11 / 18

Covenant & Protection Structure

COVENANTS

Financial Covenants

  • Minimum DSCR: 1.2x (lock-up below)
  • Reserve Coverage: 6 months debt service
  • RESP Distribution: Blocked if DSCR <1.2
  • Equity Commitment: 20% RESP upfront

Performance Covenants

  • Performance Ratio: >85% of design
  • Availability Target: >95%
  • O&M Compliance: Per framework agreement
  • ESG Reporting: Quarterly

Lender Protections & Step-in Rights

Senior Lender Rights:

  • Step-in rights over EPC/O&M contracts upon material underperformance
  • Security package includes project assets, insurance proceeds, escrow accounts
  • Cure periods: 90 days payment default, 30 days covenant breach

FLG Activation: Only after 90+ days senior default AND RESP/GFF equity exhausted

12 / 18

Risk Mitigation Architecture

RISK
Protection Coverage Risk Mitigated
GFF Mezzanine EUR 11.0M (30%) Subordinated; absorbs before debt
RESP Equity EUR 7.3M (20%) First-loss from project view
FLG Backstop EUR 1.5M Senior default protection
DSRA Reserve 6 months Payment timing volatility
Diversification 5-12 SPCs Single-project concentration

SPC-Level Flexibility

  • High-CF Sites (15%+): Banks up to 70%; GFF as low as 20%
  • Low-CF Sites (13-14%): GFF up to 40% to ensure bankability
  • Blended Portfolio: Weighted average maintains 50/30/20 across all SPCs
13 / 18

Institutional Roles Summary

ROLES

UNCDF

FLG owner & administrator; programme oversight

RMA

FLG custodian; financial regulator

BTF

EUR 11M mezzanine equity; GFF coordination

Banks

EUR 18.3M senior debt; BDB as escrow agent

RESP

EUR 7.3M equity; developer/operator

14 / 18

Cash-Flow Based Lending

DISCUSSION

KEY QUESTION FOR BANKS

Can banks provide senior debt based purely on project cash flows, WITHOUT personal guarantees from RESP shareholders?

Risk Cushion Framework in Place

  • FLG: EUR 1.5M backstop (UNCDF administered)
  • DSRA: 6 months debt service reserve
  • GFF Subordination: 30% subordinate to bank debt
  • Escrow Mechanism: Direct payment security via BDB
  • DSCR Covenant: Minimum 1.2x coverage maintained

Senior Debt Terms

  • Amount: EUR 18.3M (50%)
  • Tenor: 12 years
  • Rate: 8.5% indicative

Confirmation Needed

  • Cash-flow lending acceptable?
  • Additional protections needed?
  • Rate premium (if any)?
15 / 18

GFF Capital Recycling

GROWTH
  • GFF capital redeemed Years 4-12 (~EUR 1.22M/year)
  • Redeemed capital recycled into new projects
  • Creates permanent revolving fund mechanism
  • EUR 11M initial → 200+ MW over 30 years
  • Self-sustaining beyond MAF grant period

30-Year Projection

1

Cycle 1 (Yr 1-12)

EUR 11M → ~78 MW

Returns: EUR 14.3M

2

Cycle 2 (Yr 13-24)

EUR 14.3M → ~95 MW

Returns: EUR 18.6M

3

Cycle 3 (Yr 25-36)

EUR 18.6M → ~120 MW

Total: 200+ MW

Leverage: 18x over 30 years

16 / 18

Discussion Points

ACTION
  • Bank confirmation on cash-flow based lending terms
  • Finalize UNCDF-RMA Guaranty Account Agreement for FLG
  • BTF-SPV Subscription Agreement for mezzanine equity
  • Bank as Escrow Agency Agreement
  • Financial close target: Q2 2026

WORKSHOP DELIVERABLE

Bank letter of intent / term sheet confirmation on senior debt participation with agreed terms

17 / 18

Bankable Structure, Secure Cash Flows

✓ Clear waterfall priority protects all stakeholders
✓ UNCDF-administered FLG ensures backstop security
✓ GFF capital recycling enables long-term sustainability
✓ Cash-flow based lending with robust risk cushion

GFF Stack 4.0 | 50/30/20 | UNDP-BHU-MAF | December 2025

18 / 18
1 / 18