Current Report No. 84/2016: Resolution of the KRUK S.A. Management Board to issue unsecured bonds

The Management Board of KRUK S.A. (the “Issuer”, the “Company”) announces that on August 5th 2016 it passed a resolution to issue unsecured Series AA3 bonds (the Resolution) (the “Bonds”).
The Company intends to use the issue proceeds to finance debt purchases by the KRUK Group (the “Group”), refinance the Group’s debt, or finance the Group’s growth through acquisitions.
The Company resolved to issue up to 20 000 unsecured Series AA3 bearer bonds with a nominal value of EUR 1,000 per bond, maturing 36 months after the allotment date.
The Bonds will be offered at the issue price equal to their nominal value. They will bear interest at a fixed rate of 3.0% per annum, payable every twelve months. The Bonds will be offered in a private placement.
They will be issued by September 30th 2016, in book-entry form. The Issuer intends to convert the Bonds to book-entry form and then to introduce them to trading in the alternative trading system on the Catalyst market.
Payments under the Bonds will be made to the bondholders:
- through the CSDP and entities maintaining securities accounts − in the case of Bonds which have been registered with the CSDP;
- through the Bonds Depositary − in the case of Bonds which have not been registered with the CSDP.
The Bonds will be redeemed against payment of an amount equal to their nominal value. The Bonds will only confer the rights to cash payments. Rights attached to the Bonds will be freely transferable. The Bonds will not be secured.
The Company Management Board reports that, as at the last day of the quarter immediately preceding the submission of invitations to purchase the Bonds, i.e. as at June 30th 2016, the Issuer’s estimated liabilities totalled PLN 1 277m, including liabilities under borrowings and other debt instruments of PLN 1194m, and  past due liabilities of PLN 0m
Irrespective of the nominal value of debt, in the Terms and Conditions of the Bonds, the Management Board shall undertake to maintain the KRUK Group’s Debt Ratio at or below 3.0 until the Bonds redemption date.
The Debt Ratio will be tested on the basis of the consolidated financial statements of the KRUK Group prepared in accordance with the IFRS.
In addition, the Issuer shall undertake that in certain extraordinary circumstances defined in the Terms and Conditions of the Bonds, for instance if the Issuer shares are delisted from the Warsaw Stock Exchange, if the Debt Ratio exceeds 3.0 or if the Issuer files a petition in bankruptcy or is declared bankrupt, it will redeem the Bonds early on the Bondholder’s demand, with the proviso that the Bondholders will have the right to demand mandatory early redemption of their Bonds at such time as is defined in the Terms and Conditions of the Bonds.