ICBC (Europe) Poland Branch contributes to a zł760 million PLN syndicated loan to JSW to finance its investment, its other general corporate purposes, and its acquisition of a 95.01% stake in Przedsiębiorstwo Budowy Szybów

Project narrative

On April 9, 2019, a syndicate of five banks — including the Poland Branch of the Industrial and Commercial Bank of China (Europe) S.A. (ICBC (Europe) — entered into a zł760 million PLN syndicated loan agreement with Jastrzębska Spółka Węglowa S.A. (JSW) — a Poland-incorporated coal mining, enrichment, and vendor and coking coal producer headquartered in Jastrzębie-Zdrój and listed on the Warsaw Stock Exchange, though majority-owned by the State Treasury of the Republic of Poland (55.16% share capital) — to finance its investment, its other general corporate purposes, and its acquisition of a 95.01% stake in Przedsiębiorstwo Budowy Szybów S.A. (PBSz). The loan was divided into four tranches: a zł100.0 million PLN term loan tranche, a term loan tranche known as 'A' and a term loan tranche known as 'C' together worth the United States dollar-equivalent of zł300.0 million PLN, and a zł360.0 million PLN renewable revolving tranche known as 'B'. All tranches carried an interest rate based on a floating rate and a maturity period of seven years and a final maturity date of April 9, 2026, except the revolving tranche with a maturity period of five years with a two-year extension option and a maturity date of April 9, 2024. Term loan A tranche carried a grace period of two years from its drawdown and term loan C carried a grace period of eight months (0.667 years). JSW KOKS S.A. and Jastrzębskie Zakłady Remontowe Sp. z o.o. (JZR) issued guarantees for the loan. Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (PKOP) served as mortgage administrator. The loan was secured by (i.e. collateralized against) a registered pledge of up to the highest collateral amount of zł690.0 million PLN and $117.8 million USD established in favor of PKO BP as the pledge administrator on the following: the personal property assets of Knurów-Szczygłowice OPE, Pniówek OPE, Zofiówka OPE, Bzie-Dębina OPE, shares held by JSW in JSW KOKS and PBSz, JSW’s bank accounts, a joint contractual mortgages established in favor of PKO BP as the mortgage administrator up to zł690.0 million PLN and up to $117.8 million USD on real properties owned or held in perpetual usufruct by JSW, comprising organized parts of JSW’s enterprise in the form of Knurów-Szczygłowice OPE, Pniówek OPE, Zofiówka OPE, Bzie-Dębina OPE, and sureties extended to the lenders by JSW KOKS up to zł690.0 million PLN and $117.8 million USD; and an assignment of receivables under a commercial agreement and receivables under insurance agreements effected under the assignment agreement of April 9, 2019 governed by Polish law, entered into by and between JSW as the assignor and PKO BP as the assignee. The loan carried financial covenants on JSW that the total share of earnings before interest, taxes, depreciation and amortization (EBITDA) of guarantors and borrower must be no less than 85% and the net financial debt to EBITDA ratio must be maintained at the level not exceeding 3.3x at the end of each quarter. There were a debt limit and a cash buffer. In addition to ICBC (Europe), the following lenders contributed to the loan syndicate: Agencja Rozwoju Przemysłu S.A. (ARP), Bank Gospodarstwa Krajowego (BGK), Bank Polska Kasa Opieki S.A., and Powszechna Kasa Oszczędności Bank Polski S.A. (PKOP). The proceeds were to be used by the borrower to finance its investments, its other general corporate needs, and its acquisition of a 95.01% stake in PBSz. On June 28, 2019, the zł100.0 million PLN term loan A was disbursed, with it to be repaid in quarterly installments of zł4.8 million PLN starting from June 2021. On May 16, 2019, a $26.0 million USD portion of term loan C was drawn to finance JSW’s acquisition of a 95.01% stake in Polish underground mining company Przedsiębiorstwo Budowy Szybów S.A. (PBSz) and to be repaid quarterly starting from December 2019. On January 3, 2020, a $52.4 million USD portion of term loan A was drawn and to be repaid quarterly starting from June 2021. In 2019, the borrower drew down zł100 million PLN under the zł360 million PLN revolving tranche B. On January 3, 2020, the remaining zł260 million PLN under the revolving tranche. On October 12, 2020, a cash buffer was reduced to zł760.0 million PLN and the debt limits were increased. On December 9, 2020, the lending syndicate agreed to suspend the sanctions resulting from a failure to meet the following financial covenants (the net Financial Debt/EBITDA ratio for the fourth quarter of 2020 and first quarter of 2021; the obligation that the total share of EBITDA of the guarantors and the borrower in the total EBITDA be no less than 85% in third quarter and fourth quarter 2020 and in the first quarter 2021 to help JSW during the COVID-19 pandemic. In 2019 and 2020, the amounts of zł460.0 million PLN and $78.4 million USD were drawn down under the loan. As of December 31, 2020, term loan A and C had an outstanding balance of zł99.6 million PLN and $278.7 million USD and revolving loan B zł360.1 million PLN. As of December 31, 2021, term loan A and C had an outstanding balance of zł85.4 million PLN and $258.3 million USD and revolving loan B zł360.2 million PLN. In February 2022, JSW repaid the zł360 million PLN revolving loan. As of December 31, 2022, term loan A and C had an outstanding balance of zł66.5 million PLN and $218.1 million USD and revolving loan B of none. On June 15, 2023, JSW made a full repayment of the term loan and term facilities A and C granted under the Financing Agreement; as a result, on June 20, 2023, the lending syndicate provided JSW with a statement of full repayment and expiry of collateral.