The law firm DLA Piper has advised the Polish Development Fund (PFR) on the financing of the construction of a military base in Limanowa (in Poland’s southeastern Małopolska province) for the 11^th Małopolska Brigade of Territorial Defence.

The construction of the base is the first public investment on the Polish market to be implemented under the unique and innovative Public-Public Partnership model. This partnership is based on the long-term cooperation between three public contracting authorities – the City of Limanowa, the municipal company LimWot sp. z o.o., and an organisational unit of the Ministry of National Defence (State Treasury). Thanks to this structure, the partners can use their relevant experience, know-how and resources in the joint implementation of the project. The Public-Public Partnership model allows for synergy between entities from the government and local government sectors in the implementation of common goals in the public interest. The scope of this project includes design, construction works, obtaining financing and making the land available. The investment is being financed by PFR, and the total cost of its implementation is estimated at around PLN100 million (approx. EUR21.9 million). The investment is scheduled to be completed by the end of 2024 and the base will be used by more than 400 soldiers.

Due to the complexity of the project, as well as the fact that it was conducted under the Public-Public Partnership model, the client was advised by a multidisciplinary team of lawyers and tax advisors from DLA Piper Poland.

The work on the project covered three areas:

1. Capital investment – including the preparation of an investment agreement concluded between LimWot sp. z o.o., the City of Limanowa and PFR concerning PFR’s acquisition of a minority stake in the increased share capital of LimWot sp. z o.o. in exchange for a cash contribution; the agreement regulated PFR’s capital investment in LimWot sp. z o.o. and set forth the rights and obligations of the company’s shareholders during the investment period. The work was carried out by Michał Sowiński, with the support of Katarzyna Paruk, under the supervision of Jakub Marcinkowski, partner in the Corporate and M&A team.
2. Debt investment – including the preparation of a loan agreement between PFR and LimWot sp. z o.o., which is the main instrument for financing the investment. The work was led by Mariusz Hyla, partner and head of the Projects, Finance, and Restructuring team, and supported by Klaudia Dąbrowska.
3. Structure and organisation of the project – including the preparation of a strategic partnership agreement between the City of Limanowa, LimWot sp. z o.o. and the State Treasury – District Infrastructure Management in Kraków, which is the main document regulating the principles of long-term cooperation between the contracting parties and the organisation of the project, including the design and construction of the base, provision of the property, and obtaining financing. The work was carried out by Magdalena Zabłocka-Foulkes and Bartłomiej Ślemp under the supervision of Adriana Mierzwa-Bronikowska, partner and head of the Projects and Infrastructure team.

Rafał Dostatni, under the supervision of Łukasz Dynysiuk, partner in the Tax team, supported PFR in creating a complex, tailor-made tax structure to meet the specific needs of the Public-Public Partnership model.

We would like to thank PFR for the trust they placed in our team during the transaction.