Tesi’s stability programme and how to apply

27.4.2020

Tesi will apply its stability programme to invest in medium-sized companies encountering sudden and temporary difficulties, but which however have the potential to overcome their financial problems with further financing. The investments will be targeted at safeguarding the continuity of companies’ business operations. The size of the programme is €150 million in total.

Investment criteria

Tesi will mainly finance companies that have an appreciable impact on employment and net sales in Finland:

• Net sales of at least €10 million in 2019
• Employing over 50 people in Finland
• Profitable business before the Corona crisis and the framework to remain profitable in future – i.e. positive EBITDA in 2019, or in two of the preceding three years (2017-2019)
• Substantial deterioration of financial position due to the Corona crisis
• Company not over-indebted before the Corona crisis.

Tesi’s investments will be between €1 million and €10 million in size.

Investment terms

Investments made under the temporary stability programme differ from Tesi’s normal investment activities and provide assistance to the acute liquidity crisis that companies are currently facing.  We will make stability investments either as an equity investment or as a convertible loan. Investments will be between €1 million and €10 million.

Investments in shares

• Investments in shares are equity investments on market terms. Tesi thus becomes an owner of the investee company.
• During the investment process, Tesi performs a comprehensive third-party financial, tax & legal due diligence review of applicant companies. The beneficiary company is responsible for the costs of due diligence. The terms of an investment are negotiated on a case-by-case basis. The investment process typically takes from several weeks to a few months.
• Tesi makes direct equity investments together with other investors. Within the scope of the stability programme, our share of an investment can be as high as 70%, provided that other new investors take part in the investment round. In the case of co-investments with pre-existing owners only, Tesi’s share of the investment will be at most 50%.

Convertible loan

• A convertible loan is intended as a temporary solution for improving the financial position of companies. It is unsecured and strengthens the beneficiary company’s financial position from, for instance, a bank’s perspective.
• The loan is meant to be repaid when the company’s situation returns to normal, or Tesi has the right to convert the loan into equity. The loan is an interest-only bullet loan and the annual interest is 10%. However, the interest on the loan accumulates and is paid together with repayment of the principal, as a single lump sum at the end of the term.
• During the investment process, we arrange for a third-party financial, tax & legal due diligence of a more limited scope. The beneficiary company is responsible for the costs of due diligence. The investment process typically takes 2-4 weeks.
• Tesi uses convertible loans mainly to finance deals in which the current owners or new investors participate in the financing. Tesi can, however, finance companies with a convertible loan but without co-investors.

How to apply for financing

First, check the investment criteria presented above. If your company is eligible, click on the link below to complete the online application form. We will process applications in sequence, based on the economic impact and urgency of the applicant companies.

The application form is long, and unfortunately the data in it cannot be saved before sending it. For this reason, please look through the questions carefully, prepare your responses and then save them on your own computer before actually starting to complete the form. By requesting extensive preliminary data, we are trying to speed up the targeting of investments to as broad a base of companies as possible. The form is divided into three sections: general information, financial information, and business evaluation. In addition to answering the questions, please also attach your company’s latest financial statements and any relevant presentation materials to the form. Completing the form will take approximately one hour, provided the information for it has been collected beforehand. Unfortunately, the form is only in Finnish. Any technical questions related to completing the form can be sent by email to: vakautus@tesi.fi.

We will contact all companies that have applied for financing by email within one week from their submitting the form.

GO TO APPLICATION FORM

 

Tesi’s stability programme: Questions & Answers

How are deals prioritised?
We want the programme to have the greatest possible impact on Finnish business and employment. Owing to the large number of applications, we will prioritise deals according to how large an employer the company is in Finland, and how long the company can survive with its existing resources. 

Which instruments will Tesi use for investments made under the stability programme? 
Tesi will make stability investments either as an equity investment or as a convertible loan. The equity option immediately strengthens the equity ratio but will take longer to negotiate. The convertible loan option offers the opportunity for fast repayment, as well as the flexibility to convert the loan into equity if the situation is prolonged. 

How rapidly can I receive financing from Tesi?
In the case of stability deals, Tesi is prepared for an investment process that differs from normal and for an accelerated processing time. In the case of equity investments, we must carry out a valuation of the company and a comprehensive due diligence review, so the investment process can take from several weeks to 2 months. The target timetable for a convertible loan is 2-4 weeks, depending on the number of applications. 

Can a company receive an equity investment and a convertible loan? 
In principle, we assess the suitability of one or the other to the company’s situation.

How much are the costs incurred by the due diligence process? Must a company pay these costs if it does not receive financing from Tesi?
Tesi charges the investee or beneficiary company for due diligence costs when an investment is made. In the case of equity investments, due diligence costs depend on the deal. The costs in the case of a convertible loan are at most €25,000. 

How strict are the criteria for net sales and employment? Can I apply for financing if my company employs 45 people and/or its net sales were €9 million in 2019?
Unfortunately, we are unable to diverge from the programme criteria; each of them must be met.

Can I apply for financing if I employ 30 people in Finland and 20 in Sweden?
Our main goal is to safeguard the continuity of Finnish jobs - see above.

Will Tesi continue its normal investment operations alongside stability financing?
Yes.

Text in Finnish