Ciech seeks EBRD financing to help with debt worries - bank

16 August 2010 17:10  [Source: ICIS news]

PRAGUE (ICIS)--Ciech, Poland’s largest chemical group, has applied for long-term financing from the European Bank for Reconstruction and Development (EBRD) to help solve its immediate debt worries, investment bank Wood & Company said on Monday.

If successful, Ciech would likely use zloty (Zl) 300m ($95.8m, €75.0m) received from the ERBD to help it repay a Zl 400m tranche of debts worth Zl 1.34bn, which are owed to a group of banks that has set a payment deadline for the end of March 2011, Wood & Company added.

The proceeds could not be used for investment because “Ciech’s agreement with the bank consortium, binding until the end of 2011, states Ciech can not take any new debt on and that any proceeds from a share capital increase, [which Ciech is currently considering,] must be used to reduce the overall level of external debt”, the bank said.

“Securing long-term financing is one of the key risk factors for Ciech and thus in our view news about the possible engagement of EBRD could trigger a positive market reaction,” it added.

The application, backed by the Polish treasury ministry, had passed the preliminary EBRD approval stages, Wood & Company noted.

Ciech confirmed that last week it submitted to the EBRD the application for financing, the terms and use of which will be subject to further negotiations and discussions.

In another move aimed at reducing debt risk, Ciech had signed a deal with Poland-based ING Bank Slaski on converting its outstanding foreign currency options into debt of Zl 64m.

The company was last year hit by negative foreign currency options caused by the financial crisis.

Ciech hopes to qualify for a relaunch of its privatisation by paying down its debts and restructuring its four divisions into two.

($1 = Zl 3.13/€1 = Zl 4.00)

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By: Will Conroy
+44 20 8652 3214

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