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Current Report No. 7/2019

15.03.2019 20:05

Net debt/EBITDA ratio calculated in accordance with the terms of TPEA1119 bonds issue

TAURON Polska Energia S.A. (”Issuer”) announces that due to set up of PLN 214 million provision, as disclosed by the Issuer in current report no. 6/2019 of March 15, 2019, the net debt/EBITDA ratio as defined in the terms of the issue of TPEA1119 series bearer bonds issued on November 4, 2014 for the total amount of PLN 1,750,000,000 (”Ratio”, ”Bonds”), based on the preliminary financial results, may, as of December 31, 2018 reach 3.04x (the final value of the Ratio will be calculated based on the Issuer’s approved consolidated financial statements).

This means that the Ratio may top the maximum allowed level of 3.0x that was indicated in the terms of the Bonds issue.

The Issuer informs that, in contrast to the definitions included in other financing agreements, the Ratio’s definition takes into account the PLN 1.54 billion worth liabilities stemming from the subordinated bonds issued, in the Issuer’s debt.

At the same time, the Issuer indicates that in March 2016 they signed agreements with some holders of the Bonds (”Agreements”) who, as of March 15, 2019, are entitled to exercise in total, 41.93 percent of the votes at the bondholders’ meeting. Under the Agreements the bondholders that are a party thereto are obligated to take part in every bondholders’ meeting related to the Bonds and to vote for all the bonds held against passing of a resolution allowing to demand that the Issuer redeem the Bonds early (put option) due to the Ratio topping 3.0x. The Issuer disclosed the details of the Agreements in current report no. 16/2016 of March 22, 2016. The Agreements protect the Issuer against the risk of a demand to redeem the Bonds early , as passing of the resolution on early redemption demand at the bondholders’ meeting requires a 66 and 2/3 percent majority of the votes of the bondholders present at the meeting.

The obligations under the Agreements shall remain in force, as long as the net debt/EBITDA ratio does not top 3.5x (the definition of this ratio provided in the Agreements does not take into account the liabilities stemming from the subordinated bonds, i.e. it is in line with the definitions included in the Issuer’s other financing agreements).

At the same time, the Issuer informs that any potential case of the Ratio topping the 3.0x level will not cause a breach of other financing agreements concluded by the Issuer and will not lead to negative consequences related to such agreements, in particular, in line with the provisions of the agreements it may not constitute grounds to demand early repayment of debt.

The Bonds’ redemption date falls on November 4, 2019, and the Issuer has funds for this purpose.

The Issuer represents that its financial and liquidity position is stable. Also, the Issuer has guaranteed funds to carry out the capex projects underway, in particular to complete the construction of the 910 MW generating unit at Jaworzno.

The Issuer informs that in the case of other financing agreements that include a financial covenant in the form of the net/EBITDA ratio, the maximum value allowed was set at 3.5x or higher. The net/EBITDA ratio calculation does not take into account the debt stemming from the subordinated bonds issued. As of December 31, 2018 the value of the ratio calculated this way, based on the preliminary financial results, reached 2.54x (taking into account the provision disclosed by the Issuer in current report no. 6/2019 of March 15, 2019).

Art. 17 sec. 1 of MAR – inside information
 

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