PBG SA signed a debt settlement agreement with its main lenders, bringing the construction company closer to concluding Poland’s biggest corporate bankruptcy proceedings this week.
The builder, once the biggest in Poland, has agreed with banks to pay back 8 percent to 21 percent of its total debt of 3.3 billion zloty ($875 million), the company said in a regulatory statement filed on Sunday. Under the deal, the lenders will hold 75 percent in the company if the remaining creditors agree to the terms at a three-day meeting ending on Wednesday.
“Information about creditors’ support that we’ve gathered allows us to believe that the vote this week will be a formality,” Deputy Chief Executive Officer Kinga Banaszak-Filipiak said in a separate statement.
Debt restructuring is essential for PBG to overcome difficulties that started after it ventured beyond its core oil and gas engineering business to bid for arena and motorway projects for the 2012 European soccer championship. It filed for bankruptcy four days before the tournament started on June 8, defaulting on debt that included 825 million zloty in bonds and represented the country’s biggest corporate collapse.
The shares jumped 23 percent to 2.91 zloty at 12:31 p.m. in Warsaw, the highest since Sept. 2013 and valuing the company at 41.6 million zloty.
The agreement, signed with KBC Groep NV’s mutual funds and eight banks, including Poland’s biggest lenders PKO Bank Polski SA and Bank Pekao SA, is “a success for all involved parties,” Banaszak-Filipiak said. The 3.3 billion zloty doesn’t include 1 billion zloty demanded by the state road authority and the owner of the national stadium in Warsaw.
The company plans to resume focusing on the oil and gas business as well as power construction contracts and expects annual revenue to eventually rise to as much as 1 billion zloty, the deputy CEO said in an interview with Parkiet newspaper on Monday.
The restructuring deal gives the company “the chance for a second life,” according to Pawel Borys, PKO’s head of strategy.
The process served as an important lesson for Poland’s financial industry, said Borys. “It limited its appetite for risk and taught banks to more realistically assess” expansion plans of companies that they’re financing, he said.