Hybrid bonds

On 4 September 2017 ENERGA SA and European Investment Bank ("EIB") signed the following agreements: (i) subscription agreement, constituting the basis for issuing hybrid bonds for EUR 250 million and (ii) project agreement, defining the detailed requirements regarding the financing of an investment project (current report no. 36/2017).

The Bonds issue was held on 12 September 2017. Issued Bonds are subordinated, unsecured, coupon bearer securities which were subscribed by EIB under the European Fund for Strategic Investments launched by EIB jointly with the European Commission to execute the so-called Juncker Plan.

Tranches and interest

Bonds bear interest at a fixed interest rate estimated according to the formula specified in the terms of issue.

In accordance with the characteristics of hybrid financing, in the first financing period the Company will not be able to redeem the Bonds early and EIB will not be able to sell the Bonds early to third parties (in both cases, subject to certain exceptions specified in the Agreement). In the same period the Company may, at its sole discretion, opt to defer all or part of the Interest payments.

 Rating

According to Fitch’s methodology (Non-Financial Corporates Hybrids Treatment and Notching Criteria), for the purpose of calculating leverage ratios, 50% of the financing amount of these bonds will be treated as equity.

The purpose of obtained financing:

Execution of an investment program in the Distribution segment, consisting in modernization and expansion of the ENERGA Group's distribution assets in 2017-2019. The planned investments are aimed at increasing the security of electricity supplies while simultaneously reducing grid losses and improving service quality. The estimate qualified expenditures in this period will amount to approx. EUR 814 million.