Strong interest in Energa’s Euronotes

The Energa Group raised very attractive financing in the amount of EUR 300 million in the form of 10-year Euronotes. Following an intensive European roadshow, the bookbuilding has been completed. Investor interest was four times higher than the amount of the notes offered. 

As a result of strong interest among investors the bookbuilding process was completed following a short offering period. It was already the second issue of 10-year Euronotes worth EUR 300 million. Over 90 percent of the issue will be taken up by major, reliable institutional investors from Western Europe, mainly from Germany, France and United Kingdom.

Energa obtained very attractive terms of the issue: the note yield will be 2.25 percent, and the 2.125 percent interest coupon is among the lowest costs of financing among corporate Euronote issuers in Central and Eastern Europe for 10-year maturities. The Euronotes will be issued by the Group’s Swedish subsidiary, Energa Finance AB, and guaranteed by Energa SA. The issue will be registered and listed at the Luxembourg stock exchange.

This transaction will be finalized conditional upon, among others, signing of a subscription agreement. The final settlement of the transaction will take place on 7 March 2017.

The funds from the issue, planned to be completed still in Q1, will be allocated mainly for investments in the area of distribution and general corporate needs. They will support implementation of the Energa Group’s Strategy for 2016-2025, under which over 60 percent of the capital expenditures will be allocated for development and modernization of the distribution network. The main assumption of the Group’s development plan is to pursue projects in which the Group’s financial security will be maintained and the level of debt kept on an acceptable level.

 – Last week we held investor meetings during our roadshow across Europe. Having returned we were optimistic. We’ve just closed the books – offers were submitted by over 130 investors and were over four times higher than the value of the issue. 90 percent of the issue volume came from investment funds, insurance companies and pension funds. I’m happy that we’ve closed this important stage for the Energa Group. The funds raised in the Euronote issue will be allocated for implementation of the Energa Group’s Strategy, among others for efforts aimed at maintaining our leading position in RES and investments in the area of distribution. But we are not going to rest on our laurels. Another challenge is ahead of us, i.e. completing the work on the issue of hybrid notes with the European Investment Bank, which will be dedicated to development of the distribution network, including replacement of the meters with smart devices supporting remote readouts at all of our customers’ – announces Jacek Kościelniak, Energa SA’s Deputy President for Financial Matters.

The issue will be effected under the EMTN (Euro Medium Term Notes) program established in 2012 and updated in February 2017 up to EUR 1 billion. In March 2013, Energa Finance AB carried out the first Euronote issue with the total value of EUR 500 million and 7-year maturity. They were received with great interest among investors and Energa obtained very attractive terms of the issue: the interest coupon was 3.25 percent.

On 9 February 2017, the Moody’s rating agency upheld the long-term ratings for Energa SA and for the program established by Energa Finance AB (publ) at the existing level, Baa1. The outlook for the rating is stable. The Agency justified its decision with the high share of the regulated distribution segment in the Group’s earnings. Transparency of cash flows in this segment has positive impact on Energa’s credit profile. It also mitigates the risks following from implementation of the investment program updated by the end of 2016, resulting in possible increase of the debt ratios. At the same time, in its rating, Moody’s assumes that the Energa Group will not engage in any acquisitions the scale of which would significantly exceed the level of capital expenditures accepted in the Group’s updated strategy. The stable outlook for the rating reflects the Agency’s expectation that Energa, despite occurrence of unfavorable market factors, such as low electricity prices and reduced support for renewable sources of energy, will maintain its debt ratios at a safe level.

The updated Euronote issue program is a continuation of the financing strategy consisting in diversification of the sources of capital. The Group’s debt portfolio, in addition to standard bank loans from Polish banks, comprises a note issue in the domestic market, Euronote issues, as well as a number of long-term credit liabilities incurred from international institutions: EIB, EBRD and NIB. Currently the company is working on hybrid note issue with EIB.

The Energa Group is one of the four largest energy groups in Poland and the market leader in terms of the share of electricity generated from renewable sources. The Group’s core business entails distribution, generation and sales of electricity. The Group supplies and sells electricity to 2.9 million clients, both households and businesses.

The Energa Group is the third largest integrated distribution system operator (DSO) in Poland in terms of volume of energy supply. The distribution grid consists of power lines with a total length of over 184 thousand km and covers almost 75 thousand km2, i.e. about 24% of the country’s landmass.