PGNiG secures EUR 600 mm credit line

Polish gas monopolist PGNiG has signed a final deal with 12 banks to secure a EUR 600 mm credit line needed to protect the company from any potential exercising of a put option on nearly EUR 700 mm in bonds, the company's president said.
"We signed the final deal on Friday with 12 banks for the EUR 600 mm credit line that totally secures against the put option," PGNiG CEO president Marek Kossowski said. "We have also managed to do so at a price that is significantly lower than the price our bondholders wanted in order to change the indenture on our bonds," Kossowski said.

The state-owned PGNiG had tried to eliminate the put option, which is tied to a ratings trigger, in proposed amendments to the indenture on its eurobonds, but bondholders rejected the notion in late August. That in turn led both the Moody's and Standard & Poor's rating agencies to put the company on review for a downgrade since PGNiG did not have enough cash to cover a put.
Kossowski added that the current cost of financing the outstanding EUR 678.7 mm in eurobonds is at a level comparable to what PGNiG had offered bondholders in return for proposed changes to the indenture. PGNiG is now sending the signed agreement to the 12 banks, which are led by Sumitomo Mitsui.

PGNiG lined up the deal with the banks in November, with Moody's describing the move as supportive of the company's ratings. The financial instruments do not require guarantees from Poland's State Treasury, Kossowski has previously noted.
PGNiG issued EUR 800 mm of eurobonds in October 2001.