Polskie Koleje Panstwowe SA, the Polish state railway, will sell a stake in its freight transportation unit in the fourth quarter in the country’s biggest initial public offering in almost a year.
The railway will keep a majority holding in PKP Cargo SA after the IPO and give away a stake to its employees, Cargo said in an e-mailed statement today. It may raise as much as 1.65 billion zloty ($526 million) from the sale of its most profitable subsidiary, Puls Biznesu reported on July 11, without saying where it got the information. The company, which is Deutsche Bahn AG’s biggest competitor in the European Union, didn’t comment on the value of the deal in the statement today.
“PKP Cargo may be the EU’s first rail freight company operator to be floated,” PKP Chief Executive Officer Jakub Karnowski said in the statement. “Our strategically important location at the crossroads of numerous railway routes and planned massive modernizations of rail infrastructure should be of particular interest.”
PKP has been selling subsidiaries and real-estate assets in past years to reduce debt. Its biggest transactions included the sale of a cable car operator this year and a rail-building company in 2011. Cargo’s IPO will be the largest since Alior Bank SA’s 2.1 billion-zloty offering in December.
Warsaw-based Cargo had a 60.3 percent share in the Polish market in 2012 and controlled 8.5 percent of total rail freight in the EU, it said in the statement. That compares with DB Schenker’s 28 percent and 5.4 percent shares in the EU and Poland, respectively.
The company, which holds licenses to provide services in Slovakia, the Czech Republic, Germany, Austria, Belgium and Hungary, will continue expansion abroad and may consider takeovers of foreign competitors to quicken growth, Chief Executive Officer Lukasz Boron said in e-mailed responses to Bloomberg questions today.
“Our share in the rail freight market abroad is rising fast but the business is still too small to satisfy our expectations,” Boron said. “We want to increase our share in foreign freight markets.”
First-half net income slumped 44 percent to 76.8 million zloty as revenue fell 9.2 percent to 2.29 billion zloty amid the country’s economic slowdown, it said in the statement. Hard coal shipping accounted for 43 percent and building materials for 14 percent of its total freight.
Cargo may see its costs falling next year after Polish railroad operator, PKP PLK SA, proposed cutting access fees by 20 percent. Cargo pays PLK about 1 billion zloty annually.
As part of a settlement deal with unions this month, Cargo employees will get 165 million zloty of shares after the IPO free of charge. They won’t be allowed to sell the stock for the next two years, according to today’s statement. PKP also planned to sell a stake in Cargo to the European Bank for Reconstruction and Development, CEOKarnowski said in May.
Goldman Sachs Group Inc., Morgan Stanley and PKO Bank Polski SA are joint global coordinators and joint bookrunners in the IPO. Ipopema Securities SA, Raiffeisen Centrobank AG and UniCredit SpA are joint bookrunners, while Dom Inwestycyjny Investors SA and Mercurius Dom Maklerski SA are acting as domestic co-bookrunners.
Poland this year sold to the public a stake in property developer Grupa PHN SA and plans to offer power utility Energa SA in the fourth quarter to help finance the budget deficit.
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