TAURON conducted a hybrid bond issue totalling EUR 190m, the funds raised will be streamed to investment in the distribution segment

Under TAURON’s new strategy announced in September this year, the company undertook measures which were intended to win new forms of financing for its planned investment projects. One of them is the issue of (junior) hybrid bonds totalling EUR 190m, which have now been taken over by the European Investment Bank (EIB) under the Juncker Plan.

-The agreement between TAURON Polska Energia and the EIB under the Juncker Plan is one of first steps in the energy sector investment plan presented by the Ministry of Energy. We are pleased that one of the first projects within the Juncker Plan concerns the energy sector. We have huge challenges ahead, but we will consistently implement our investment plan,” emphasised Minister of Energy Krzysztof Tchórzewski

- Hybrid financing extended by the EIB will both be the first issue of hybrid bonds conducted by the EIB under the Juncker Plan, and the first issue of hybrid bonds conducted in Poland - underscores Filip Grzegorczyk, the CEO of TAURON Polska Energia.

The funds raised will be channelled to investment projects in the distribution area, consisting in connecting new customers to the medium- and low-voltage distribution network.

- The key benefit derived by the Company from the new financing is the fact that junior bonds are exempt from the debt ratio calculation, which forms a covenant in TAURON’s financial documentation, and the rating agency can include 50 per cent of that financing in equity. Additionally, the long tenor of the new financing and the attractive coupon on the issued bonds makes this instrument even more attractive compared to other similar issues - adds Marek Wadowski, Vice-CFO of TAURON Polska Energia.

The successful completion of today’s issue is another example of effective collaboration between TAURON Polska Energia and the European Investment Bank – the Company has already concluded four long-term credit facility agreements, with a preferential financing cost, for a total of PLN 1.7bn.

Hybrid financing is an instrument which has been gaining in popularity in global financial markets in the recent years. It is an intermediate solution between typical debt financing and a share issue. It is advantageous both to owners, who do not see their holding diluted, and to the issuer who will be able to use the tax shield effect due to the obligatory character of the instrument. Hybrid financing is characterised by long tenor periods.

The Juncker Plan is an initiative launched in June 2015 by the European Commission in collaboration with the EIB, intended to boost the growth of EU economy by supporting investment projects, a.o. in the R&D sector, infrastructure, and measures geared at increasing competitiveness and employment. One of the pillars on which the Juncker Plan rests is the European Fund for Strategic Investments (EFSI), which holds at least EUR 315bn of potential public and private investment funding, offering support for a.o. long-term infrastructure projects.