PBG Group reaches agreement with financing banks
PBG Group reaches agreement with financing banks
Bridge financing to become available by May 25th 2012
On May 14th 2012, the PBG Group ended negotiations with the financing banks by signing a standstill agreement on temporary and conditional suspension of enforcement of debt covenants ("the Agreement"). Thus, the Group satisfied the precondition to entering into negotiations concerning a bridge loan needed until the bond issue scheduled for June 2012. The secured funds will be used to finance the Group's operations and will enable PBG to repay a significant portion of its liabilities towards subcontractors and suppliers. The financing is to be made available by May 25th 2012. The Agreement enables the Group to implement its financing strategy, focus its operations on the crude oil, natural gas and power engineering segments, divest non-core assets and reduce debt.
It is the first step in the Group's debt restructuring process. Under the Agreement, the banks providing financing to PBG Group companies (excluding RAFAKO and the companies comprising the RAFAKO Group, except Energomontaż Południe S.A.) declared to refrain from taking any actions related to the collection of their receivables during the term of the Agreement.
The Agreement paves way for the PBG Group to obtain bridge financing. In the Agreement, the four banks providing the bridge financing undertook to prompt their lending committees to make final decisions in this respect by May 18th 2012, so that the financing becomes available by May 25th 2012. The loan will be used to finance the Group's day-to-day operations, including the refinancing of a portion of its liabilities towards subcontractors and suppliers. According the Agreement, the bridge loan should be repaid using proceeds from the convertible bond issue. The parties assume that the final repayment date will be July 19th 2012 at the latest. In addition, the parties have expressed their intention to execute, by June 30th 2012, a refinancing agreement concerning PBG's debt incurred to finance the RAFAKO acquisition. Under the agreement, PBG will create a mortgage security over its properties. Furthermore, the parties have agreed that any breach by the PBG Group of the financial covenants contained in the existing credit facility agreements before the effective date and during the term of the Agreement is not, and will not be, considered an event of default under such agreements.
"Execution of the agreement with our financing banks gives us the possibility to implement our funding plans and, consequently, to stabilise our financial position. It also gives us enough time to carry out the announced reorganisation of the Group, dispose of non-core assets and focus our operations on the crude oil, natural gas and power engineering segments.
At present, one of our top priorities is improvement of liquidity on motorways construction contracts and repayment of the liabilities towards our subcontractors and suppliers. Completion of negotiations and execution of the agreement with the banks opens the way to the bridge loan. Under the agreement, the banks undertook to take effort to make the funds available to us by May 25th this year," said Przemysław Szkudlarczyk, Vice-President of the PBG Management Board.