Cognor Group agrees key debt re-financing terms with banks

Cognor Group agrees key debt re-financing terms with banks

Cognor Group will receive EUR 50 million in the form of a five-year term loan, which will be used to buy back secured bonds.

The financing will be extended to the steel-making group by a consortium comprising Bank Pekao and mBank in equal proportions. The financing is subject to signing financial documentation and compliance with certain conditions precedent, including the provision of documents confirming an own contribution to Cognor Holding S.A., in a specified manner, covering part of the amount necessary to buy back the bonds.

Aside from the EUR 50 million term loan intended to buy back a part of secured bonds issued on foreign markets, worth approx. EUR 80.9 million, the Group will obtain a working capital limit of up to PLN 80 million. “The banks’ commitment to provide this financing is an exceptionally important step on the way to reducing the Group’s debt and debt servicing costs,” said Krzysztof Zoła, CFO and management board member at Cognor Holding S.A. “Agreeing a capital injection for the company from funds raised through an equity issue was a key element of negotiations with the banks. This is also why we proposed to the general meeting that the maximum number of shares to be issued be increased to 67.3 million,” explained Krzysztof Zoła. A resolution to raise the maximum number of shares to be issued was adopted at today’s general meeting.

The management board of Cognor Holding S.A. emphasises that re-financing of the existing debt will have a substantial positive impact on the company’s financial situation and will allow it to develop more dynamically. “Financing on market terms will mean that debt servicing costs are no longer such a burden on our results. We estimate that thanks to this new financing structure our finance costs will go down by PLN 25 million per year, starting already in 2018,” explained Krzysztof Zoła.

Interest on the working capital facility and the term credit facility is based on WIBOR or EURIBOR plus margin on market terms for this type of transaction. For comparison, current interest on the bonds that are to be repaid with the credit facility and share issue is 12.5% annualised. According to the schedule, the company plans to complete the re-financing process at the end of the third and start of the fourth quarter of 2017.