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UPDATE 2-Polimex buys time from creditors
July 25, 2012 / 8:19 AM / 5 years ago

UPDATE 2-Polimex buys time from creditors

* Company struck debt deal with banks, bond-holders

* Granted four extra months for pending payments

* Conversion into shares may be part of debt restructuring

* Potential buyers running due diligence at Polimex units

* Group seeks savings of $53 mln in 2012-2013 (Adds company comments, updates shares)

By Adrian Krajewski

WARSAW, July 25 (Reuters) - Creditors of beleaguered Polish builder Polimex agreed on Wednesday to waive interest on the group’s 2.5 billion zlotys ($718 million) debt pile for four months to give it time to restructure debt and improve liquidity.

Polimex is the largest of dozens of construction companies facing financial trouble after a bidding war for contracts to build roads for the Euro 2012 soccer championship Poland co-hosted with Ukraine.

The deals they signed gave them razor-thin margins, which were eaten up by the rising cost of materials, leaving the firms carrying a loss on the projects.

Polimex was facing almost 300 million zlotys in pending payments this months alone. Its local rival PBG, in a similar predicament after the soccer tournament, was granted bankruptcy protection in court in June.

The group signed the moratorium on interest payments with around 40 different entities, including a group of 14 banks led by Poland’s top two lenders PKO BP and Pekao .

The deal however, still hinges on another 4 banks which are expected to make their final decision within days.

“We now have four months to build our action scheme to allow us to reach agreements with creditors and allow further cooperation for years to come,” Polimex Chief Executive Konrad Jaskola told a news conference.

“Our debt restructuring process has begun,” he said. “Debt conversion into shares is among the options viewed.”

The announcement pleased the market. Shares in Polimex led Warsaw bourse gainers with a jump of almost 20 percent.

The battered stock had dropped to its lowest level in 8 years earlier this year but Wednesday’s gains took the firm’s market value to almost 390 million zlotys.

GOOD NEWS

“This (the debt deal) is very good news,” IDM SA analyst Andrzej Bernatowicz said. “The market was very sceptical and the consensus was Polimex would not secure agreement.”

The builder, which runs a portfolio of over 13 billion zlotys, now plans savings of 184 million by the end of 2013 on top of the 44 million in savings that it secured last year.

To improve liquidity, it also wants to spin off assets, including parts of its real estate portfolio and its subsidiary units Sefako, Energomontaz Polnoc and Torpol.

Polimex boss Jaskola already signalled he hoped to offload Energomontaz and Sefako for at least 200 million zlotys, offering the units to potential bidders including state restructuring agency ARP.

“Bidders, not only ARP, are already running due diligence in Energomontaz and Sefako,” the CEO said on Wednesday.

“We also want to sell 49 percent in Torpol, which runs a portfolio of 2.8 billion zlotys,” deputy CEO Grzegorz Szkopek added. “We chose an adviser and have interest from financial investors and also strategic ones.”

Deputy Prime Minister Waldemar Pawlak raised the possibility of providing state aid for the sector via ARP, but the idea was countered by both Finance Minister and Prime Minister.

State aid would likely fall foul of European Union regulators who monitor violations of competition rules. ($1 = 3.4818 Polish zlotys) (Additional reporting by Pawel Bernat; Editing by Jon Loades-Carter)

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