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Deal 5: Pekao TFI Head of Legal Dominik Mielczarek on MPO Warszawa Bond Issuance

Deal 5: Pekao TFI Head of Legal Dominik Mielczarek on MPO Warszawa Bond Issuance

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On December 2, 2020, CEE Legal Matters reported that Act BSWW had advised investment funds managed by Pekao TFI S.A on the PLN 2.5 billion bond issuance program of Miejskie Przedsiebiorstwo Oczyszczania w m. st. Warszawie sp. z o.o., (MPO Warszawa) aimed at financing the modernization and extension of a municipal waste incineration plant and the construction of a waste segregation plant in Warsaw. CEEIHM spoke with Dominik Mielczarek, Head of Legal Department at Pekao TFI, to learn more about the matter.

CEEIHM: To start, please tell us about Pekao TFI S.A.

Dominik: With almost 30 years of experience, Pekao TFI S.A. is the longest-running investment fund company active on the Polish market. Currently, we provide services to more than 400,000 clients. Our numerous experts have extensive knowledge and experience in the investment markets.

CEEIHM: What is the PLN 2.5 billion intended for?

Dominik: The PLN 2.5 billion issue of bonds of Miejskie Przedsiebiorstwo Oczyszczania w m. st. Warszawie sp. z o.o. is aimed at financing the modernization and extension of the municipal waste incineration plant, as well as the construction of a waste segregation plant for Warsaw.

This project is of strategic importance for Warsaw. Following the project's completion, this is going to be Poland’s biggest facility of this sort, and among the largest in Europe. It is supposed to combust over 300 tons of mixed waste annually and generate energy for more than a twelve thousand households. It will be a very modern and eco-friendly facility, as it was designed in line with top environmental standards related to waste management.

CEEIHM: The program was developed in cooperation with Bank Pekao S.A. and Pekao Investment Banking S.A. What were the roles of these partners?

Dominik: Bank Pekao S.A., working together with Pekao TFI S.A. and Pekao Investment Banking S.A., developed the structure of the bonds’ issuance, which will ensure that financing for this investment is obtained at the most advantageous market conditions.

Bank Pekao S.A. will act as the coordinator of the bond issuance program, issuing agent, calculation agent, paying agent, and collateral agent with respect to the bonds.

Meanwhile, Pekao Investment Banking S.A. will play the role of the offering agent for the bonds issued as part of the program (in accordance with the Financial Instruments Trading Act).

CEEIHM: What would you say was the most complex aspect of the issuance from a legal perspective?

Dominik: The complexity resulted from a wide range of operational factors. First of all, the project involved multiple entities and their legal advisors, which made the negotiations and the logistics behind the program a challenge in itself. Also, when preparing the structure of the issue program, we had to take into account the specific needs of the issuer's sole shareholder, i.e. the City of Warsaw, and the long financing period of 20 years, which is quite unusual when compared to other market transactions. Finally, the value of PLN 2.5 billion and the sense of the project’s strategic importance added an extra bit of pressure to the whole process.

CEEIHM: Why did you choose Act BSWW as your legal advisor on this matter?

Dominik: We have been working with Act BSWW for years now on various projects, especially bonds, and their work has always proved seamless.

Turning to them for legal advice, in this case, meant I was sure this project would run smoothly. They did not disappoint us this time, either. The law firm has a large bonds team that knows this business inside out, having considerable experience in complex financing and various collateral structures across a range of sectors. They easily identify key risks and loopholes. The project was unconventional and challenging thus this team was a natural choice for such tailor-made legal solutions.

Originally reported by CEE In-House Matters.

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