The deal comes with a financial guarantee granted on Tranche A from vendors, Siemens and Nortel. Further tranches will not be made available until stipulated revenue targets have been met. This mitigation of risk considerably lowers margins on the loan without having to rely on vendor financing proper.

Wireless Local Loop (WLL) can support large quantities of data transfers at high speeds with data connection based on Internet protocol, allowing transmission speeds of up to 32 times faster than an ISDN connection. The technology has previously only been available to large corporations, but FirstMark Communications Europe, of which FirstMark Communications Deutschland is a wholly owned subsidiary, is specifically targeting small- and medium-sized businesses. Firstmark's vision is a pan-European network connecting 18 countries, using not only WLL but also optical fiber and DSL (Digital Subscriber Line), another means of transmitting high-speed Internet connections.

Having secured 148 WLL licenses in Germany earlier in the year, Firstmark is already serving a number of trial customers in Munich, Hamburg and Berlin. Extending its dominance beyond national boundaries, FirstMark has subsequently won licenses in France, Spain, Portugal, Switzerland, Luxembourg and Finland.

Senior debt for FirstMark Communications Deutschland was targeted at Eu345 million and financing closed slightly oversubscribed. Lead arranged and fully underwritten by Deutsche Bank, nine further banks joined in during general syndication. Senior co-arrangers, buying in at 70bp for Eu40 million are Barclays, CIBC, Dresdner, Royal Bank of Scotland and West LB. Co-arrangers with tickets at Eu30 million for 55bp are BBVA and BNP Paribas while KfW and Credit Lyonnais joined as lead managers for Eu25 million and Eu15 million respectively.

Financing is split into three term loans and a revolving credit, with all banks joining pro rata each tranche. The structure mitigates risk as far as possible by relying on the vendor backing during start up. Tranche A is a Eu135 million four-year term loan, fully guaranteed by Siemens and Nortel, which will be used to finance the initial roll out phase, including financing of base stations and other network structure. Tranche B is an Eu85 million four-year term loan which is to be made available only on the basis of a revenue test and will be used to finance the equipment that is to be installed at the customer's premises when the customer signs up for the services. Thus initial risk, including technological, is virtually eliminated for the banks by the fact that the only tranche to be used prior to generation of revenue is totally guaranteed by the vendors.

The injection of money from tranche B, although signaling an established and working system, will not mark the end of network build out. David Brakoniecki, financial director of FirstMark Communications Europe stressed that they see the future as an ongoing development, responding to and growing with demand.

Tranche C, a Eu195 million four-year term loan is also conditional, its availability limited to the amount by which annualised Ebitda multiplied by 5 exceeds indebtedness (excluding the tranche A loan). The purpose of this tranche is to take out A, reflecting the pattern that risk is shifting from vendors to sponsors and banks once the project is in place, and the technology thus tested. Any remaining funds from tranche C will be used to finance further network upgrade and expansion and will not, therefore, result in any cash disbursement.

The fourth and final tranche is a four-year revolving credit dependent firstly on this conversion having occurred in full and then subject to the same conditions concerning project debt as its predecessor.