Financing of the AB Mazeikiu Nafta acquisition
Today, 29th November 2006, PKN ORLEN signed the loan agreements which will allow the acquisition of AB Mazeikiu Nafta. The two syndicated loans, for a total value of EUR 1.6bn, are provided by eight Polish and international banks.
The financing, which is secured by a five-year EUR 800m rolling loan and a twelve-month EUR 800m bridge loan, constitutes the biggest financing project in the history of PKN ORLEN. It is also the biggest single financing arranged for a Polish company. Together with its own financial resources and open credit lines PKN ORLEN has secured the financing for the acquisition of AB Mazeikiu Nafta shares as per the agreements with the Government of Lithuania and Yukos International UK BV.
The financing structure will allow PKN ORLEN’s financing costs to remain attractive, thanks to the support of the leading banks. At the same time, the bridge financing will permit an efficient euro bond issue.
The new rolling loan, similar to the previous one granted in December 2005 for EUR 1.0 bn, consists of two options for annual extension, which provides PKN ORLEN with a convenient method of payment planning.
The obtained resources also permit the financing of further steps following the acquisition – the buy-out after the mandatory tender offer, and the potential purchase of the 10% stake owned by the Government of Lithuania. The 100% stake in AB Mazeikiu Nafta is valued at USD 2.8 bn.
The syndicated loan was provided by: ABN AMRO Bank N.V., Bank Handlowy w Warszawie S.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., BNP Paribas, ING Bank N.V. / ING Bank Slaski S.A., KBC BANK NV /Kredyt Bank S.A., Polish branch of Societe Generale and UniCredit Group, which for years have been the key banks co-operating with PKN ORLEN.
The financing, together with the acquisition of a controlling stake in AB Mazeikiu Nafta, marks a significant step in the implementation of PKN ORLEN’s strategy and will be reflected in the Group’s balance sheet. The transaction will temporarily raise the Group’s debt ratio beyond the optimum 1.5 x 2.0 level of consolidated EBIDTA. The Group’s management aims to return to the optimum debt level within 2 – 3 years.
The transaction in Lithuania marks the creation of Central Eastern Europe’s biggest oil business in terms of crude throughput (31.7 mta) and number of retail outlets (2,732 stations in Poland, Germany, Czech Republic and Lithuania).
AB Mazeikiu Nafta is the biggest refinery in the Baltic States with a maximum processing capacity of 10mta. The company owns and operates a network of crude and product pipelines in Lithuania, as well as an export-import marine reloading terminal in Butinge on the Baltic Sea. The refinery markets its petroleum products through a network of 27 retail stations.
On 26th May 2006 PKN ORLEN and Yukos International UK B.V., signed a Share Sale and Purchase Agreement concerning the purchase by PKN ORLEN of 53.7% stakes in AB Mazeikiu Nafta for USD 1,492m. On the 9th June 2006, Kestutis Daukszys, acting as Prime Minister of Lithuania, signed a complete set of agreements enabling the acquisition of 30.66% of the shares of Mazeiku Nafta for a total of USD 852m. According to the agreements, the Lithuanian Government will retain 10.00% of the shares of Mazeikiu Nafta and will have a 5-year option to put those shares to PKN ORLEN. The offered price for the project is to decrease from USD 284m to USD 278m after 3 years.