PBG submits a draft restructuring agreement along with arrangement proposals to Principal Creditors
At the meeting held on September 3rd 2013, the Management Board of PBG SA w upadłości układowej (in company voluntary arrangement) approved a draft restructuring agreement with arrangement proposals. The restructuring documents were also positively assessed by the Company's Supervisory Board and sent to the principal Creditors, including banks, bondholders, insurers, main trade creditors, as well as Mr Jerzy Wiśniewski, the Company's Main Shareholder.
The documents contain the proposed restructuring options presented and discussed at meetings with the Creditors, including the boundary business terms of the proposals presented at the last meeting with the Financial Creditors.
The documents reflect the Creditors' comments and expectations voiced during the long process of the consultations with them.
"We invite the Creditors to negotiate the draft restructuring agreement along with the arrangements proposals, as approved by the Company, and expect that a final agreement on the terms of debt restructuring will be reached as soon as practicable, as this will pave the way to voting on the arrangement and to its implementation," said Kinga Banaszak-Filipiak, Vice-President of the Management Board of PBG. "We believe that the proposal we have prepared is optimal for all the parties and is feasible for the Company to implement, with priority given to the interests of the Creditors. Under this option, the level of Creditor satisfaction is greater than in the case of liquidation.
According to the arrangement proposals, the Company's Creditors will be satisfied in seven groups, depending on the category of interest they represent and the type and size of their claims. Small Creditors (up to PLN 500 thousand) will be offered better terms for debt restructuring and will be satisfied fully, in instalments. The claims of the principal shareholders, covered by the arrangement, will be fully converted into Company shares and will not be repayable. Claims covered by the arrangement, to the extent not satisfied in one of the ways specified in the arrangement proposals, will be cancelled.
Creditors that enter into an agreement on new financing with the Company, for a total of PLN 250m, will be entitled to additional repayments of the debt covered by the arrangement.
"In the arrangement proposals, we assume that new financing may be provided to the Company in the form of credit facilities, guarantee facilities or issue of long-term bonds. We also assume that it will be possible to negotiate and sign with the Creditors providing new financing agreements defining detailed terms of such financing, prior to the voting on the arrangement," said Paweł Mortas, President of the PBG Management Board.
Once the arrangement is executed, the PBG shareholder structure will change. Creditors subject to the arrangement will hold ordinary bearer shares representing approximately 75% of the Company's share capital, shareholder Jerzy Wiśniewski will hold ordinary bearer shares representing approximately 23.5% of the Company's share capital, and the other shareholders will hold ordinary bearer shares representing approximately 1.5% of the Company's share capital.
The draft restructuring agreement provides for cooperation of the Parties to ensure the adoption of the arrangement proposals attached to the draft agreement by the Meeting of Creditors, and approval of the arrangement by the Bankruptcy Court in the shortest time possible.
The draft restructuring agreement also obliges the PBG Management Board to present to the Company's General Meeting drafts of General Meeting resolutions designed to implement the arrangement proposals. It obliges shareholder Jerzy Wiśniewski to acquire part of the claims covered by the arrangement from the Creditors who would like to accede to the restructuring agreement, and not to dispose of the Company shares acquired as part of the arrangement for five years from the effective date of the agreement. The text of future obligations is yet to be drafted in detail and confirmed through consultations.
In view of the above, the PBG Management Board convened an Extraordinary General Meeting for September 30th 2013,in order to vote on the draft resolutions designed to implement the arrangement proposals.
During the arrangement proceedings, initiated more than a year ago, PBG has been consistently carrying out its key investment projects, including projects of material importance for Poland's energy security - the Wierzchowice underground gas storage facility and the LNG terminal in Świnoujście. It also completed the construction of the Lubiatów-Międzychód-Grotów oil and gas production facility ahead of schedule. The PBG Group companies' project pipelines include such important contracts as the power generating unit for Elektrownia Jaworzno III, and expansion of Elektrownia Opole (RAFAKO SA), as well as construction of an additional compressor for the Husów Underground Gas Storage Facility (PBG Oil and Gas).
In the opinion of the Management Board, by entering into arrangement the Company will be able to continue its current operations, rebuild its value and grow further, which will facilitate satisfaction of the Creditors' claims in accordance with the arrangement proposals and will help achieve material public interest goals, such as protection of jobs, subcontractors, principals, and local communities.
The full text of the draft documents is available on the Company's website at www.pbg-sa.plin the Restructuring section.
***
On June 4th 2012, the PBG Management Board adopted a resolution to file a petition for insolvency with an arrangement option. The petition outlined two arrangement options. On June 13th 2012, the District Court for Poznań-Stare Miasto of Poznań, Commercial Insolvency and Arrangement Division, declared the Company to be insolvent, in voluntary arrangement. The Court ruled that the Company would remain under its own management and appointed a Judge Commissioner and Court Supervisor.
The deadline for claims acceptance expired three months after the insolvency announcement in the press, i.e. on September 21st 2012.
PBG commenced work on the Restructuring Plan, and a number of meetings with Financial Creditors, Bondholders and Insurance Companies were held. Consultations concerning the main business assumptions of the restructuring agreement and the terms and form of debt repayment were made. Terms for new financing were also initially probed. During the process, managed by the Bankruptcy Court, the Board of Creditors met four times.
On June 12th 2013, the Company was notified that a list of claims had been submitted to the Judge Commissioner by the Court Supervisor. The total amount of the acknowledged claims, placed on the list of claims by the Court Supervisor, amounted to PLN 2,776,254,806.77, in accordance with the Management Board’s estimates. On July 4th 2013, the Judge announced the final list of claims. Currently, in accordance with the Bankruptcy and Restructuring Law, the process of examining objections raised against the list of claims and revision of the claims included in the list is underway.
At the last meeting of the PBG Management Board and the Creditors, held on July 5th 2013, the business terms of the Company's debt restructuring were presented. An updated and reviewed model of financing sources for the arrangement was also presented.
Once the Bankruptcy Court approves the final list of claims, a vote on the arrangement will be held within one month, in accordance with applicable laws.