Central Bank of Egypt Initiative to Support Replacement and Renovation of Residence Hotels, Floating Hotels, and Tourist Transportation Fleets

Cairo: February 21, 2017

Dear Mr. Chairman of the Board of Directors of Tahya Bank,

Greetings,

In continuation of the initiatives issued by the Central Bank of Egypt to support the tourism sector and its workers,

And with reference to the recent discussions and meetings regarding their proposals to support the sector and its current needs, the Central Bank has deemed it necessary to issue an initiative aimed at financing companies and tourist establishments wishing to replace and renovate residence hotels, floating hotels, and tourist transportation fleets. Therefore, the Board of Directors of the Central Bank of Egypt, in its session held on January 31, 2017, has decided the following:

Making available an amount of five billion pounds through banks. We outline below the general framework for this initiative, through which banks will study each case individually and take the appropriate decision regarding it, as follows:

1. Purpose of Financing: To carry out the necessary replacement and renovation operations for residence hotels, floating hotels, and tourist transportation fleets.

2. The initiative applies only to regular bank customers as of December 31, 2016.

3. Interest Rate: 10% (declining simple interest).

4. Loan Tenor: Maximum of 10 years. a. Grace period: Two years, including a withdrawal period not exceeding one year. b. Interest is capitalized during the grace period. c. Repayment frequency: Quarterly.

5. The bank finances a maximum of 75% of the total cost of replacement and renovation, while the client bears the remaining percentage (25%) through one of the following alternatives:

   • Repayment of the client's total share as an advance payment before starting the replacement and renovation process.
   • Obtaining a commitment from the management company (if any) to cover the value of the advance payment in case of lack of liquidity for the client.
   • Repayment of the client's share in a proportion corresponding to the bank's share, based on the bank's study of the cash flows provided by the client.

6. Reliance on locally manufactured products for 75% of the total cost of the replacement and renovation process.

7. The replacement and renovation process must comply with the new standards and specifications issued by the Ministry of Tourism.

8. The bank must rely on the technical studies (including feasibility study) conducted by the company, with the bank engaging a specialized consulting body to verify the project's feasibility, monitor implementation, and approve completion percentages, such that withdrawals from financing correspond to statements aligned with these percentages.

9. Compensation of banks for the interest rate differential, through the Central Bank of Egypt, based on the following: Lending interest rate for one night: 1% + 10%

Please accept our highest respect.

Tarek Amer