KRUK launches retail bond issue

March 19th 2020 is the planned opening date of the subscription period for this year’s first issue of public bonds as part of KRUK’s Sixth Bond Programme. The subscription period will end on April 1st 2020. The total nominal value of the offering will be up to PLN 30m and the bonds will bear interest at a floating rate estimated in the first interest period at 5.20%* per annum (3M WIBOR plus a margin of 3.50pp). The offering will be carried out by a distribution consortium comprising Dom Maklerski BDM, Noble Securities, Michael/Ström Dom Maklerski, Dom Maklerski BOŚ, Copernicus Securities and Ipopema Securities.

Up to 300,000 five-year Series AJ2 bonds will be issued, with the issue price and nominal value of PLN 100 per bond. The issue will be successful if at least 100 bonds are subscribed and paid for.

“After more than six months, we are returning to the public bond market. We have just released our full-year figures, with net profit at PLN 277m and record-high cash EBITDA of PLN 1.1bn **. Potential investors will therefore have access to the full company’s most recent financial statement, which is an helping factor in decision making process with investments of this type. The issue proceeds will be used for investments in the KRUK Group as this year we plan to increase investments relative to 2019,” said Piotr Krupa, President of KRUK S.A. Management Board. “Obviously, we are very well aware of what is happening in the world these days. The current situation related to the epidemic of coronavirus is a challenge for all of us. Safety is crucial for me, both in my private life and in my management of KRUK, which I have been doing for more than 20 years. I believe that now, in addition to health, we all need control and composure. For today, in the context of the bond issue, what prevailed was the belief that some kind of consistency and persistence is now very needed both in the world of finance and among investors. We have started preparations for the bond issue, but if the situation  will develop in a significantly negative scenario, we do not exclude postponement or cancellation the issue. KRUK has been present in the bond market for more than 12 years. During our market history, we have issued bonds for over PLN 2.4bn and we have already redeemed bonds worth PLN 1.1bn. The bonds contributed to the acquisition of more than 700 debt portfolios with a total nominal value of PLN 77bn. Today’s issue of PLN 30m worth of bonds is to us part of the entire work planned for 2020, but I expect that despite the challenging environment investors will be interested in our bonds,” Piotr Krupa added.

In 2019, the KRUK Group’s net profit was PLN 277m, and cash EBITDA – PLN 1,130m. KRUK’s investment spending in 2019 was PLN 781m, of which PLN 389m was invested in the fourth quarter alone. KRUK also maintained a conservative approach to debt, with the net debt to cash EBITDA ratio of 2.3x.

The bond offering will be conducted on the basis of a prospectus for KRUK’s Sixth Public Bond Programme, approved by the Polish Financial Supervision Authority on July 5th 2019. On its basis, KRUK is able to issue bonds for one year from the approval date. The nominal value of the entire programme is PLN 700m. The Final Terms and Conditions of Series AJ2 bonds have been published on the Company’s website at www.kruksa.pl in the Bonds section as well as, for information purposes, on the website of the offering broker, i.e. Dom Maklerski BDM S.A., at www.bdm.pl.

The only legally binding documents containing information on the Issuer and the Public Offering of Series AJ2 Bonds are the Base Prospectus for the Sixth Bond Issue Programme, published on July 10th 2019, Supplements to the Base Prospectus and the Final Terms and Conditions of Series AJ2 Bonds published on March 12th 2020, available on the Issuer’s websitewww.kruksa.pl and additionally, for information purposes, on the website of the Offering Broker at www.bdm.pl. Subscription orders for Series AJ2 Bonds will be accepted by the Offering Broker, i.e. Dom Maklerski BDM S.A., and members of the distribution consortium.

* An example of annual interest rate calculated for the bonds. The calculation uses the 3M WIBOR rate for borrowings denominated in the złoty on the Polish interbank market. On March 9th 2020, the rate was 1.70%. The actual rate of interest on Series AJ2 Bonds in the first interest period will be determined based on the 3M WIBOR rate for złoty-denominated loans as at March 31st 2020, plus a margin of 3.50pp as specified in the Final Terms and Conditions of Series AJ2 Bonds. In the interest periods following the first interest period, the actual reference rate, and thus the rate of interest on Series AJ2 bonds, may be higher, lower or may remain unchanged (at the level presented in the example).

** Cash EBITDA = EBITDA plus recoveries from purchased debt portfolios minus revenue from collection of purchased debt. Calculations based on data as at December 31st 2019