Current Report No. 10/2014: Execution of a significant debt sale agreement and a significant credit facility agreement
Current Report No. 10/2014
Date of the report: March 31st 2014
Subject: Execution of a significant debt sale agreement and a significant credit facility agreement
Legal basis: Art. 56.1.1 of the Act on Public Offering – inside information
Text of the report:
The Management Board of KRUK S.A. (the Company, the Borrower) announces that upon the conclusion, on March 31st 2014, of negotiations with Getin Noble Bank S.A. (the Bank) concerning a debt sale agreement (the Sale Agreement), conducted by the Company on behalf of its subsidiary, PROKURA Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty (FIZ PROKURA, the Buyer), and negotiations concerning a revolving credit facility agreement (the Credit Facility Agreement), conducted by the Company on its own behalf, and having obtained the consent of the Company's Supervisory Board to enter into the Sale Agreement and the Credit Facility Agreement, these agreements were signed on March 31st 2014.
Acting in accordance with Art. 57.1 of the Act on Public Offering [...], dated July 29th 2005, and Par. 2.1 of the Minister of Finance's Regulation on the type of information that could prejudice legitimate interests of issuers [...], dated April 13th 2006, on March 24th 2014 the Company delayed the publication of information on the negotiations and their circumstances as its publication could adversely affect the progress or outcome of the negotiations and thus prejudice the Company's legitimate interests, and also because the Company was required to obtain the necessary corporate approval.
The Sale Agreement provides for the purchase, from Getin Noble Bank S.A. by FIZ PROKURA, represented by KRUK Towarzystwo Funduszy Inwestycyjnych S.A., of a mortgage-backed debt portfolio together with security, comprising debt under banking transactions executed by the Bank with debtors, with an aggregate estimated nominal amount of PLN 710m, for the price of PLN 230m (the Price). The purchased debt portfolio will be recognised in FIZ PROKURA's accounts at acquisition price.
The Buyer is obliged to pay the Price by June 30th 2014.
The purchase will be financed with FIZ PROKURA's internally generated funds or with credit facilities granted to the Company, including under the Credit Facility Agreement, or proceeds from bonds issued by the Company.
The debt was transferred to the Buyer on the execution date of the Sale Agreement, subject to applicable laws, in particular Art. 79 of the Act on land and mortgages registers of July 6th 1982.
The Sale Agreement stipulates no conditions precedent or subsequent.
The Sale Agreement provides for a PLN 90.5m contractual penalty payable to the Buyer if the Bank exercises its right to rescind the agreement.
Other terms and conditions of the Sale Agreement do not differ from those commonly used in agreements of such type.
The Company further reports that there are no links between the Company, its management or supervisory personnel and the Bank or its management personnel.
The Credit Facility Agreement also executed by KRUK S.A. and Getin Noble Bank S.A. on March 31st 2014 is a revolving credit facility of up to PLN 260m (the Credit Facility), to be used solely for refinancing or financing of up to 100% of the acquisition price of debt portfolios purchased in Poland or abroad by the Borrower or KRUK Group companies (KRUK Group Companies).
The term of the facility will be ten years, from May 2nd 2014 to May 1st 2024 (Lending Period, Availability Period).
The Credit Facility amount will be PLN 260m from May 2nd 2014 to May 1st 2021, PLN 195m from May 2nd 2021 to May 1st 2022, PLN 130m from May 2nd 2022 to May 1st 2023, and PLN 65m from May 2nd 2023 to May 1st 2024.
The Borrower is to repay the Credit Facility by May 1st 2024, along with any interest, fees, commissions, charges and other costs, if any, under the Credit Facility, with the proviso that in the period from May 2nd 2014 to April 30th 2021 the Borrower will only be required to pay interest on amounts actually drawn under the Credit Facility; by May 1st 2021 the Borrower is to repay a part of the Credit Facility so as to reduce its amount to PLN 195m or less; by May 1st 2022 the Borrower is to repay a part of the Credit Facility so as to reduce its amount as at May 2nd 2022 to PLN 130m or less; and by May 1st 2023 the Borrower is to repay a part of the Credit Facility so as to reduce its amount as at May 2nd 2013 to no more than PLN 65m.
The Credit Facility bears interest at 1M WIBOR rate plus bank margin set on arms' length basis.
The repayment of the Bank's receivables under the Credit Facility Agreement is secured with:
a) a financial pledge under Luxembourg law over the equity interests held by the Borrower or other KRUK Group Companies in SeCapital S.a.R.L;
b) a power of attorney to the Borrower's bank accounts held with the Bank;
c) pledges under Polish or other law over the debt portfolios or Fund investment certificates held by the Borrower or KRUK Group Companies, or over the equity interests held by KRUK Group Companies or the Borrower in KRUK Group Companies;
d) mortgage under Polish law or security under law other than Polish law over properties owned by the Borrower and KRUK Group Companies.
The Credit Facility Agreement does not provide for any contractual penalties to be imposed on the Company other than interest on overdue debt. However, pursuant to the Credit Facility Agreement, contractual penalties may be imposed on the Bank if the Bank unjustifiably: withholds the Borrower's right to draw further funds under the Credit Facility or part of the Credit Facility, terminates the Credit Facility Agreement in whole or in part, or reduces the Credit Facility amount by any unused portion of the Credit Facility, or if the Company terminates the Credit Facility Agreement due to the Bank's breach of the Credit Facility Agreement.
Furthermore, the Company undertook to maintain the debt ratio and the credit security at specific levels.
The other provisions of the Credit Facility Agreement, including in particular the provisions relating to disbursement of the facility, default interest and withdrawal from or termination of the Credit Facility Agreement, do not differ from standard provisions used in agreements of such type. The Credit Facility Agreement stipulates no conditions precedent or subsequent.
The value of the Debt Sale Agreement and the Credit Facility Agreement exceeds 10% of the Group’s revenue for the previous four financial quarters, which is the criterion for considering an agreement as material.
Following the execution of the above-mentioned agreements, the total value of all agreements between KRUK Group companies and companies from the Getin Noble Bank Group in the 12 months prior to the publication of this report reached PLN 522m.
Detailed legal basis: Par. 5.1.3 of the Minister of Finance's Regulation on current and periodic information to be published by issuers of securities [...], dated February 19th 2009, and Art. 57.1 and Art. 57.3 of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies, dated July 29th 2005.