Polish government to take stake in Polimex-Mostostal
By Helen Wright04 January 2013
The Polish government’s Industrial Development Agency (IDA) has agreed to buy up to 33% in beleaguered Polimex-Mostostal as part of a restructuring agreement intended to help the Polish contractor avoid bankruptcy.
The IDA said it had agreed to acquire PLN150 million (€36.7 million) worth of shares and subscription warrants in the contractor, but this could increase to a maximum of PLN278 million (€67.5 million) for the full 33%.
It said its investment would stabilise the situation at Polimex-Mostostal, which owes a total of PLN2.1 billion (€513.7 million) to creditors.
President of the IDA Wojciech Dabrowski said, “We were able to overcome an impasse in talks.This paved the way for the signing of the contract, which is of great importance not only to Polimex-Mostostal, creditors and our agency, but also for the power sector. Any bankruptcy at Polimex-Mostostal would impede the implementation of restoration plans and investment in the energy sector.”
Debt-laden Polimex-Mostostal has reported losses and project overruns on a range of contracts, particularly in its roadbuilding division.
The IDA said the creditor agreement and its capital investment gave Polimex-Mostostal “a real opportunity for the implementation of the restructuring programme, and the recovery of its long-term ability to conduct profitable business.”
Polimex-Mostostal also plans to sell non-core assets worth at least PLN600 million (€146.8 million) and cut operating expenses by at least PLN300 million (€73.4 million) by the end of 2015.
A string of Polish contractors have gone bust recently, including Katowickie Przedsiebiorstwo Budownictwa Przemyslowego (Budus), which filed for bankruptcy in the District Court of Katowice in October last year, and Hydrobudowa, which was forced into liquidation after facing penalties over the construction of the Warsaw National Stadium in the country's capital.