The Polish steelmaker has decided to resume its secondary public offering, intending to raise at least PLN 38 million for debt reduction.

Today, the Management Board of Cognor Holding S.A. (Cognor, the Company, the Group) adopted a resolution to resume the suspended share offering and submitted an application to approve the respective amendment to the offering prospectus with the Polish Financial Supervision Authority (KNF). The amendment modifies the terms of the offering including the reduction of the minimum proceeds from PLN 90 million to PLN 38 million. Subject to the new minimum SPO value Cognor will issue as many new shares as the number subscribed for by investors even if it falls below the previously adopted threshold of PLN 90 million. In such a case the Group will not be able to utilize the EUR 50 million term loan extended by a consortium of local banks for the repayment of the entire Cognor’s indebtedness under the senior secured notes due in 2020 and outstanding currently at the amount of EUR 81 million.  The SPO proceeds will be used for debt reduction, including the indebtedness resulting from the senior secured notes which may also involve open market purchases, subject to the limitations of the notes’ indenture. However, should Cognor raise PLN 90 million or more, the early redemption procedure to repay all of the senior secured notes will be applied with the use of the said bank loan and the Company’s own funds, as anticipated previously. No change has been made to the in-kind component of the SPO and the non-ferrous metals foundry, Odlewnia Metali Szopienice, is still expected to join the Group.

“We intend to raise as much proceeds as possible. The PLN 38 million is now the minimum target, according to the resolution on the share capital increase adopted in May 25th 2017 by Cognor’s shareholders. If we raise less than PLN 90 million, we will not be able to repay all of our senior notes. In consequence, the scale of savings on our financing costs will not be as significant as we planned previously. However, we believe that a successful offering, regardless of the ultimate amount of the proceeds, may form good grounds for opening of the discussions with the banks on modification of their EUR 50 million term loan so that we can achieve the restructuring of all of Cognors’ debt under the senior secured notes in the nearest future. Here, I would like to recall that the full repayment of the senior secured notes could lead to at least PLN 25 million of savings each year” said Krzysztof Zoła, Cognor’s CFO and management board member.

The other terms of the offering remain unchanged. The Company will publish the new offering timetable following the KNF’s approval of the modified offering prospectus.

mBank S.A. and Pekao Investment Banking S.A. are global joint coordinators, joint bookrunners and joint offering agents. Trigon Dom Maklerski S.A. is also a joint bookrunner. Weil, Gotshal & Manges is providing legal advice for Cognor Holding’s SPO.