Clifford Chance has advised the European Investment Bank (EBI) on the debut hybrid unsecured subordinated registered bonds in the amount of EUR 190 million issued on December 16, 2016 by Tauron Polska Energia S.A. Allen & Overy advised Tauron Polska on what is the first issue of hybrid bonds of this type by a Polish entity.
On December 14, 2016, the following agreements were signed between Tauron Polska Energia S.A. and the European Investment Bank: a) a project agreement setting out detailed requirements concerning the financing of an investment task, and b) a subscription agreement that forms the basis for the issue of hybrid bonds of EUR 190 million. The proceeds of the issue of the bonds will be designated for covering the expenses of Tauron Dystrybucja S.A. associated with the development and upgrade of the power grid infrastructure in 2016-2020. The bonds issued are subordinated, unsecured, coupon bearer securities and were subscribed for by the EIB within the operations of the European Fund for Strategic Investments, launched by the EIB along with the European Commission for the purposes of implementation of the Juncker plan.
According to Clifford Chance, "the issue of the bonds will have a positive impact on the financial stability of Tauron Polska Energia S.A. because the bonds are excluded from the calculation of the debt ratio which is a covenant for the other programs for the financing of the company. Moreover, the bonds may be included by a rating agency as equity in the amount of 50 percent of the financing." When the issue was being planned the bonds received an expected Fitch rating of BB+ (EXP).
The work of the Clifford Chance team was supervised and the transaction was coordinated on a day-to-day basis by Warsaw Managing Partner Grzegorz Namiotkiewicz, supported by Counsel Grzegorz Abram and Associate Pawel Zagorski. The Warsaw team co-operated with a team of lawyers from Clifford Chance London, including Partners Paul Deakins and Clare Burgess and Associate Manav Melwani.
Tauron was advised by Allen & Overy Warsaw Partner Piotr Lesinski.