News
10.06.2010 PGNiG to Issue Bonds
On June 10th 2010 Polskie Górnictwo Naftowe i Gazownictwo executed an agreement with six banks (Pekao SA, ING Bank Śląski SA, PKO BP SA, Bank Handlowy w Warszawie SA, Societe Generale SA and BNP Paribas SA, Polish Branch) concerning a bond issue programme with a value of up to PLN 3 billion ("the Programme").
Under the Programme, effective until July 31st 2013, PGNiG will be able to issue discount and coupon bonds with maturities ranging from one month to one year.
The bonds will bear interest based on the WIBOR rate plus a margin, whose level will depend on the use of the Programme and the ratio of consolidated net debt to consolidated EBITDA.
Proceeds from the first issue of bonds will be used to repay a multi-currency credit facility maturing on July 27th 2010, whereas proceeds from subsequent issues will be applied towards investment projects envisaged by the PGNiG Group's strategy, designed on the one hand to strengthen Poland's energy security, and on the other - to enhance the Group's value.
2010 is another year in which PGNiG will incur heavy capital expenditure and one in which it will focus its investment efforts more intensely than ever on the upstream area. PGNiG intends to increase its expenditure on oil and gas exploration, both in Poland and abroad, to over PLN 900 million. Additional funds will also be applied towards shale gas exploration in Poland.
In 2010, projects designed to increase the domestic oil and gas production volumes will cost some PLN 1 billion, up from approx. PLN 700 million in 2009. The key project involves the expansion of the Lubiatów-Międzychód-Grotów ("LMG") mine, which - given its current pace of progress - stands a good chance of being completed in 2012 (a year ahead of the schedule). Consequently, 2010-2011 will be a period marked by the highest expenditure incurred on the LMG field (totalling some PLN 1 billion, of which nearly a half will be spent in 2010). The Company will also spend PLN 620 million on natural gas and crude oil production projects abroad.
In 2010, PGNiG is also continuing the expansion of its underground gas storage facilities, including the Kosakowo and Mogilno cavern facilities and the largest underground storage site in Wierzchowice. Capital expenditure on the expansion of underground gas storage capacities in 2010 will reach approx. PLN 850 million, up from approx. PLN 800 million in 2009.
Another PLN 1 billion will be used in 2010 to upgrade the distribution network and to construct new terminals.
Starting from 2008, PGNiG has allocated an average of up to PLN 5 billion annually for oil and gas exploration and for investment projects.
Funds raised through the successive bond issues will help the Group smoothly implement its ambitious development plans.
The first bond issue will have no direct effect on PGNiG's overall indebtedness (current debt will be refinanced into non-current debt).
As the banks underwrite all the bond issues under the Programme, as long as the financial covenants are not exceeded, the Programme will provide us the Company with liquidity irrespective of the prevailing market conditions.
Joanna Zakrzewska
Spokesperson for PGNiG SA
