The Management Board of KRUK S.A. has announced its decision to abandon the offering of Series AJ2 bonds. Made in response to the coronavirus epidemic spreading in Poland, the decision was guided by the sense of responsibility for the public, as subscriptions would require investors to come in person to Brokerage Houses’ Customer Service Points. The planned opening of this year’s first issue of public bonds for subscription under KRUK’s Sixth Bond Programme was announced on March 12th 2020. The subscription was scheduled to begin on March 19th 2020 and end on April 1st 2020. The Company announces it will consider a bond offering under the Programme when the pandemic subsides.
“In light of the coronavirus epidemic and in consultation with our Partners working on the Series AJ2 bond issue, we have decided to abandon the offering of these bonds. We have good liquidity and access to debt finance from banks (the amount of available and undrawn credit facilities of the KRUK Group at the end of 2019 amounted to PLN 556 million). The purpose of the planned PLN 30m issue was to diversify the sources of finance used to fund new portfolio investments. We will invest less than expected. As the coronavirus pandemic continues to spread, we have decided the Group should adopt a selective approach to portfolio buying,” said Piotr Krupa, President of the KRUK S.A. Management Board. “We have been present on the bonds market for thirteen years now, and on the market for public bonds for retail investors – for six years. Having received signals of strong investor interest in new bonds, for the first time in our operating history we faced the dilemma of whether to proceed with a bond offering. But our decision was guided by the sense of responsibility and the need to ensure our bondholders’ and distributors’ safety. As a rule, placing subscription orders for bonds requires investors to be physically present in brokerage houses’ Customer Service Points (CSP). Considering the circumstances, this could expose both investors and CSP staff to risks, which is something we want to avoid. Our strong liquidity position enables us to easily postpone the offering until the pandemic has passed. All things considered, I believe we have made the right decision,” added Mr Krupa.
The total nominal value of the offering was to be up to PLN 30m and the bonds were to 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 was to 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.
“The KRUK Group enjoys a good financial position having always maintained a conservative approach to debt – its net debt to equity ratio at the end of 2019 was 1.3x, a solid foundation for operating under the present conditions. Our debt level is markedly lower compared with the rest of our industry. Our long-standing practice of keeping debt at relatively low levels will be our competitive advantage, particularly under the current circumstances. Obviously, our priorities have changed, and we are focused on minimising the adverse impacts of the coronavirus on the Group’s assets and financial performance. We concentrate on securing our key business processes as the coronavirus outbreak is spreading across all markets where we operate. This applies both to managing purchased debt portfolios and outsourcing services provided to financial institutions, businesses and our other business partners. We are already working mainly remotely - our Contact Center also works efficiently in this mode and we provide services to our business partners in this area, added Piotr Krupa.
We run our operations smoothly across all markets. We want to be prepared for various scenarios as the pandemic continues. We treat all reports on the coronavirus seriously, and we try to adjust our measures so that they are as effective as possible. My goal is to prepare the Group for full-scale investment activity when the pandemic threat ends,” said Mr Krupa.