51/2019 – Conclusion of a number of long-term financing agreements and change of bridge financing documentation

With reference to the following current reports of Trakcja PRKiI S.A. (‘Company’): No. 12/2019 of June 13, 2019 on the conclusion of bridge financing agreements, No. 19/2019 of June 21, 2019 and No. 20/2019 of June 24, 2019 on the conclusion of annexes to the bridge financing documentation, No. 20/2019 of June 26, 2019 regarding the correction of the current report No. 20/2019 of June 24, 2019, No. 21/2019 of June 26 regarding the conclusion of Annex No. 2 to the loan agreement regarding bridge financing, No. 24/2019 of June 27, 2019 on the annex to the agreement between creditors, No. 32/2019 of July 29, 2019 on the conclusion of the annex to the loan agreement, and No. 33/2019 of July 30 2019 on the conclusion of annexes to the bridge financing documentation, No. 40/2019 of 29 August 2019 on the conclusion of annexes to the bridge financing documentation and No. 41/2019 of 30 August 2019 on the conclusion of an annex to agreement between creditors, the Management Board of the Company informs that on September 27, 2019, the Company signed the following documents regarding bridge financing:

1. annex to the loan agreement concluded on June 13, 2019 between the Company and COMSA, S.A.U. (‘COMSA’) (‘Loan Agreement’) annexed on June 24, 2019 (as reported by the Company in Current Report No. 20/2019), June 26, 2019 (as reported by the Company in Current Report No. 21/2019 ), July 30, 2019 (about which the Company informed in current report No. 33/2019) and August 29, 2019 (about which the Company informed in current report No. 40/2019), according to which the loan repayment date was changed to October 14, 2019;
2. annex to the agreement between creditors concluded on June 13, 2019 (‘Agreement Between Creditors’) between the Company and its subsidiaries, i.e. Bahn Technik Wrocław sp. z o.o., PRK 7 Nieruchomości sp. z o.o., Przedsiębiorstwo Drogowo Mostowe BIAŁYSTOK S.A., Przedsiębiorstwo Produkcyjno – Usługowe “DALBA” sp. z o.o. and mBank S.A., Credit Agricole Bank Polska S.A., Bank Polska Kasa Opieki S.A., AXA Ubezpieczenia Towarzystwo Ubezpieczeń i Reasekuracji S.A., Credendo – Excess & Surety Societe Anonyme, operating in Poland through Credendo – Excess & Surety S.A. branch in Poland, Sopockie Towarzystwo Ubezpieczeń ERGO Hestia S.A., Korporacja Ubezpieczeń Kredytów Eksportowych S.A., Generali Towarzystwo Ubezpieczeń S.A., Powszechny Zakład Ubezpieczeń S.A., UNIQA Towarzystwo Ubezpieczeń S.A. and COMSA (‘Annex to the Agreement between Creditors’) and annexed on June 27, 2019 (about which the Company informed in current report No. 24/2019), July 30, 2019 (about which the Company informed in current report No. 33 / 2019) and August 29, 2019 (about which the Company announced in current report No. 41/2019).

Pursuant to the Annex to Agreement Between Creditors, the period of cooperation of entities being parties to the Agreement Between Creditors was extended until October 11, 2019.

1. Annex to the loan agreement concluded on June 13, 2019 (‘Loan Agreement’) between the Company and its subsidiaries, i.e. Bahn Technik Wrocław sp. z o.o., PRK 7 Nieruchomości sp. z o.o., Przedsiębiorstwo Drogowo Mostowe BIAŁYSTOK S.A. , Przedsiębiorstwo Produkcyjno – Usługowe “DALBA” sp. z o.o., mBank S.A. and Credit Agricole Bank Polska S.A. (‘Annex to the Loan Agreement’) and annexed on June 21, 2019 (about which the Company informed in current report No. 19/2019), July 29, 2019 (about which the Company informed in current report No. 32/2019) and August 29, 2019 (about which the Company informed in current report No. 40/2019).

Pursuant to the Annex to the Loan Agreement, following the fulfillment of the conditions precedent set out in the Annex to the Loan Agreement (‘Conditions precedent to the Loan Agreement’), the repayment date of the working capital loan will be changed to October 11, 2019 (inclusive).

The Precedent Conditions, the fulfillment of which is required for the entry into force of amendments to the Loan Agreement under bride financing, include deferring the repayment date of the loan under the Loan Agreement, intra-group loans and existing financing, and making changes to the Agreement between Creditors.

Apart from the above changes, no significant provisions of the Loan Agreement, the Intercreditor Agreement and the Loan Agreement have not changed.

At the same time, in relation to the current report of the Company No. 4/2019 of February 18, 2019 and the current report of the Company No. 12/2019 of the Company of June 13, 2019. The Management Board of the Company informs that in connection with the ongoing restructuring of financial debt and in accordance with the assumptions On September 27, 2019, the Company signed the documentation of the target long-term financing covering:

1. an annex introducing the amended and unified Loan Agreement concluded between the Company and Bahn Technik Wrocław sp. z o.o., PRK 7 Nieruchomości sp. z o.o., Przedsiębiorstwo Drogowo Mostowe BIAŁYSTOK S.A., Przedsiębiorstwo Produkcyjno – Usługowe “DALBA” sp. Z oo as borrowers and z o.o. and Torprojekt sp. z o.o., Przedsiębiorstwo Eksploatacji Ulic i Mostów sp. z o.o., as guarantors (hereinafter jointly referred to as ‘Related Entities’), and mBank S.A. with its registered office in Warsaw, Credit Agricole Bank Polska S.A. with its registered office in Wrocław, Bank Gospodarstwa Krajowego with headquarters in Warsaw as creditors and Agencja Rozwoju Przemysłu S.A. with headquarters in Warsaw (‘ARP’) as a lender, on the basis of which the Company and its Related Entities as borrowers will be granted new revolving credits in the maximum amount of PLN 104,600,000 and a revolving loan up to PLN 27,600,000 and a new line guarantee for advance repayment guarantees up to PLN 200,000,000 (‘Unified Credit Agreement’);
2. Annex introducing the amended and unified agreement between creditors of 13 June 2019, concluded between the Company, Related Entities, COMSA and creditors, i.e. Bank Gospodarstwa Krajowego, ARP, mBank S.A., Credit Agricole Bank Polska S.A., Bank Polska Kasa Opieki S.A., AXA Ubezpieczenia Towarzystwo Ubezpieczeń i Reasekuracji S.A., Credendo – Excess & Surety Societe Anonyme, Sopockie Towarzystwo Ubezpieczeń ERGO Hestia SA, Korporacja Ubezpieczeń Kredytów Eksportowych S.A., Generali Towarzystwo Ubezpieczeń SA and COMSA, Powszechny Zakład Ubezpieczeń S.A., Uniqa Towarzystwo Ubezpieczeń S.A. (‘Creditors’), on the basis of which the conditions were set by the Creditors for the Creditors to take enforcement actions against the Company and Related Entities, and a security agent was appointed, a hierarchy of receivables due to the Creditors from the Company and Related Entities as well as collaterals established for the Creditors by the Company and Related Entities (‘Unified Agreement between Creditors’);
3. a common terms agreement concluded between, the Company, Related Entities, mBank S.A., Credit Agricole Bank Polska S.A., Bank Polska Kasa Opieki S.A., Bank Gospodarstwa Krajowego, and ARP (‘Common Terms Agreement’);
4. the annex introducing the amended and unified agreement on the unification of selected terms of the warranty and guarantee agreements of June 13, 2019, between the Company, Related Parties, AXA Ubezpieczenia Towarzystwo Ubezpieczeń i Reasekuracji SA, Credendo – Excess & Surety Societe Anonyme, operating in Poland through Credendo – Excess & Surety Spółka Akcyjna Branch in Poland, Generali Towarzystwo Ubezpieczeń SA, Korporacja Ubezpieczeń Kredytów Eksportowych SA, Sopot Insurance Company Ergo Hestia SA, Powszechny Zakład Ubezpieczeń SA and UNIQA Towarzystwo Ubezpieczeń SA, in connection with which, on September 27, 2019, contracts were signed for new guarantee lines, based on which insurance companies agreed to provide the Company with renewable guarantee lines for tender guarantees and good performance of works / removal of defects and defects in total maximum amount of PLN 616,568.276.  

The launch of credits, loans and guarantee lines based on the above agreements depends on, among others from the fulfillment by the Company and Related Entities of the conditions precedent indicated in the agreements, including, first of all, the change of some existing collateral by increasing the maximum amount of collateral and extending some existing collateral to Bank Gospodarstwa Krajowego and ARP, establishing new collateral and increasing the share capital of the Company, under which the Company will obtain at least PLN 39,600,000.00, as well as the conclusion of lease contracts for specific machines of Bahn Technik Wrocław sp. z o.o.

Security for liabilities against the Company and Related Entities arising from the above documents are to include, among others:

1. a mortgage on real estate owned by the Company and Related Undertakings, including real estate located in the following cities: Warsaw, Bieńkowice, Skierdy, Sobolewo, Białystok, Bobrowniki and Marki;
2. transfer for securing rights under commercial contracts, insurance, and joint loans made by the Company and Related Entities;
3. pledge on shares held by the Company in (i) Bahn Technik Wrocław sp. z o.o.; (ii) PRK 7 Nieruchomości sp. z o.o.; (iii) Przedsiębiorstwo Drogowo Mostowe BIAŁYSTOK S.A.; (iv) TORPROJEKT sp. z o.o.; (v) Przedsiębiorstwo Eksploatacji Ulic i Mostów sp. z o.o.; (vi) Przedsiębiorstwo Produkcyjno – Usługowe “DALBA” sp. z o.o.; (vii) AB Kauno Tiltai;
4. surety granted by the Company and Related Entities;
5. registered pledge on the set of things and rights established by the Company and Related Entities;
6. registered pledge on inventories established by the Company;
7. registered pledge on machines established by Bahn Technik Wrocław sp. z o.o .;
8. pledge on the Company’s account; and
9. voluntary submission to enforcement made by the Company and Related Entities.

Pursuant to the Unified Credit Agreement and on the conditions specified therein, the Company and its Related Entities, being borrowers, have been or will be granted:

(i) a revolving credit drawn up in a fixed-term contract in the total amount of PLN 31,000,000, intended for the payment of overdue liabilities and financing of ongoing operations or for granting intragroup loans with the payment deadline by December 31, 2022;

(ii) a revolving credit in the total amount of PLN 75,000,000 and a revolving loan for use in the form of revolving withdrawals on the same terms as a revolving loan, in the total amount of PLN 27,600,000, to finance working capital and current operations of the Company with maturity payments until December 31, 2022;

(iii) a revolving credit launched in term contracts in the total amount of PLN 17,600,000, intended for financing working capital and current operations with a payment deadline of December 31, 2022;

(iv) a revolving credit in term draw in the total maximum amount of PLN 12,000,000, intended for financing working capital and current operations, by December 31, 2022;

(v) a non-renewable guarantee line for the return of an advance on specific contracts concluded by the Company or Related Entities, the beneficiary of which will be PKP Polskie Linie Kolejowe S.A., in the total amount of PLN 25,000,000;

(vi) a non-renewable guarantee line for a performance guarantee, the beneficiary of which will be the General Directorate for National Roads and Motorways in the total amount of PLN 8,000,000;

(vii) a renewable guarantee line for advance payment guarantees for new contracts of the Company, the beneficiary of which will be an entity acceptable to all issuers of a given guarantee, in the total amount of PLN 200,000,000.

In addition, the Unified Agreement Between Creditors provides for the possibility of ARP taking up convertible bonds for the Company’s shares up to the amount of PLN 20,000,000, secured by a mortgage on the Company’s property located in Bieńkowice, if the Company’s General Meeting adopts the issue of these bonds. In addition, in connection with the conclusion of the Unified Agreement Between Creditors, the Company concluded an additional agreement with ARP in which the Company and ARP confirmed the intentions of the parties regarding the main parameters of bonds convertible into Company shares, the possibility of taking up by ARP provides for the Unified Agreement Between Creditors (the ‘Agreement’). Pursuant to the Agreement, if the Company’s Management Board takes a decision to convene the General Meeting of the Company with the agenda providing for the adoption of resolutions on the issue of convertible bonds for the Company’s shares and offering them to ARP (and subject to appropriate corporate decisions, including an appropriate amendment to the Company’s statute ), The Company’s Management Board will propose to the General Meeting to adopt resolutions providing, inter alia, for the following bond issue conditions:

1. bond amount – PLN 20,000,000;
2. issue price – equal to the nominal value;
3. purpose of the bond – financing working capital and current operations of the Company, including financing costs;
4. financing period – redemption of bonds following the payment of funds under a leaseback agreement for the property of the Company located in Bieńkowice (Dolnośląskie Voivodeship);
5. the issue price of the Company’s shares in the event of conversion – not higher than PLN 1.70 per share;
6. date of conversion – based on the ARP decision taken during the financing period after 12 months from the date of issue of the bond to the day of redemption;
7. security of bonds – contractual mortgage with the highest priority of satisfaction, on the Company’s property located in Bieńkowice (Dolnośląskie Voivodeship)

The agreement is not binding and was concluded only to confirm the intentions of the parties regarding its subject.

In addition, the Common Terms Agreement provides for the possibility of COMSA taking up convertible bonds for the Company’s shares up to the amount of PLN 15,000,000.00 on the same terms as described above for bonds that may be taken up by ARP, with the proviso that the bonds that may be taken up by COMSA will be unsecured and subordinated to other liabilities of the Company.

The Company has not made any decision regarding the convening of the General Meeting of the Company with the agenda providing for the adoption of resolutions on the issue of convertible bonds for the Company’s shares. If the Company makes such a decision, information about convening the General Meeting of the Company, together with detailed information regarding the date and agenda, and draft resolutions will be published by the Company in the form of a current report.

Legal base: Article 17 paragraph 1 MAR