Bank Chess at Polimex

Bank Chess at Polimex

Creditors’ consent or bankruptcy – these are two scenarios for this construction company. Rescue coalition can be threatened by BGŻ.

Polimex-Mostostal, one of the biggest construction companies in Poland, which negotiates amendments to conditions of liabilities’ repayment with creditors, is running out of time. In the middle of next week it has to pay obligations amounting to PLN 150m and a few days later a PLN 150m credit at Pekao. Talks, which are supposed to rescue the company from bankruptcy, are very tense and according to unconfirmed information of Puls Biznesu they are at risk of being terminated. All creditors have to be unanimous but according to our information BGŻ does not want to participate. We determined BGŻ blocked PLN 20-30m at the current account and terminated credit agreements with a 7-day notice.

‘Polimex is our client and we do not comment on the cooperation with clients,’ cuts short press office at BGŻ.

Banks at rescue

According to our information, representatives of corporate banking departments at PKO BP (credits the company for PLN 290m) and Pekao (PLN 160m) as well as ING OFE, the largest shareholder of Polimex, are engaged in preparing a restructuring and refinancing plan.

If one bank breaks rank it will mean the collapse of the rescue plan and, most probably, force Polimex to file an application for bankruptcy. Why is BGŻ’s decision, whose engagement in Polimex is not large, so important? The creditors are striving to reach a so called standstill agreement, in which each party undertakes to suspend debt collection for the period of four months.

’90-95% of creditors are ready to sign the agreement, BGŻ remains unconvinced,’ says our informer.

An example of acting in concert that saved company from bankruptcy is PKM Duda. PBG and Bomi are the opposite where lack of banks’ solidarity forced an application for bankruptcy.

Both Konrad Jaskóła, president, and Robert Bednarski, financial director, did not find time to talk to us as they participated in meetings with creditors.

‘The negotiations are in progress, nobody resigned,’ says a person close to the company.

A three-year plan

If Polimex’s shareholders suspend debt collection for four months the board will prepare a 2-3-year strategy for financing the company with a detailed schedule of debt repayment. The majority of creditors are aware of the fact it is the best way to recover money. Also the government is ready to support big construction companies in trouble.

‘It is possible the government becomes involved in rescuing construction companies but it will not be an easy transfer of public money to private entities. A prerequisite is to restructure the company and the banks have to take the responsibility,’ says Prime Minister Donald Tusk.

The circle of institutions that take part in the negotiations is wide: the company has credits in more than ten banks in Poland reaching PLN 700m and its bonds worth more than PLN 400m were taken by several dozen entities. Earlier, he wanted to pay them back using money gained from selling property but the sale of development assets has given PLN 15m so far and Agency for Industrial Development has only started to consider the possibility of purchasing Sefako and Energomontaż Północ Gdynia. The cash is absorbed by construction sites working at full capacity in the middle of the season.

The game of the Dutch

Why does BGŻ do not want to agree on the rescue plan for Polimex?

‘The decision was taken not in Poland but in the headquarters of the owner,’ says our informer.

Robobank that owns nearly 50% of BGŻ’s shares announced a call to purchase remaining shares at a very attractive price in April – PLN 72.5, whereas the rate on the date of issue was PLN 47. Despite the fact the subscription ends toward the end of the month, it became impatient due to lack of answer from the Treasury (has 26% shares). Talks regarding this matter are still held.

Probably also Idea TF, which is in serious trouble itself, and Millenium TFI that excuses itself by following the instructions of Polish Financial Supervision Authority to be careful with roll over bonds, are not in favor of the proposition. Both institutions refused to comment on this subject.

‘We are observing the situation, not commenting on the operations of the Board of Polimex,’ cuts short Mirosław Dziółko that manages Millenium TFI’s funds.