Current Report No. 36/2017
Report Title: Signing of hybrid financing agreements with European Investment Bank
Legal Basis: Article 17 Section 1 of the Market Abuse Regulation – confidential information
The Management Board of ENERGA SA (“Company”) reports that on 4 September 2017 the Company and European Investment Bank (“EIB”) signed the following agreements:
- project agreement, defining the detailed requirements regarding the financing of an investment project,
- subscription agreement (“Subscription Agreement”), constituting the basis for issuing hybrid bonds for EUR 250 million (“Bonds”).
The said financing will be slated for 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.
The Bonds are subordinated, unsecured, coupon bearer securities to be subscribed for by EIB under the European Fund for Strategic Investments launched by EIB jointly with the European Commission to execute the so-called Juncker Plan. The date of the Bond issue has been set for 12 September 2017.
In accordance with the Subscription Agreement, the Bonds will be issued in two tranches with the total nominal value of:
- EUR 125 million, maturing in 16 years, with the first financing period set for 6 years from the issue date,
- EUR 125 million, maturing in 20 years, with the first financing period set for 10 years from the issue date.
Bonds will 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.
The Bond issue will have positive impact on the Group’s financial stability and diversification of its financing sources.