Two consortia offer €650mn financing to state-owned Bulgarian Energy Holding

By bne IntelliNews February 29, 2016

Wholly state-owned Bulgarian Energy Holding (BEH) has received binding offers from two consortia for bridge loans, to be refinanced at a later stage through bond issues, BEH said on February 26. The total financing offered covers BEH’s needs of up to €650mn, the holding also reported.

The deadline for raising the €650mn financing has been extended several times since mid-2015. Because of the delays, energy minister Temenuzhka Petkova sacked BEH CEO Jacklen Cohen on February 9.

Eleven financial institutions participated in the direct negotiation procedure announced by BEH and the two consortia that submitted offers include eight of these candidates.

BEH will use the proceeds to settle payables owed by its subsidiary, Bulgaria’s public electricity supplier National Electricity Company (NEK), to two US-owned coal-fired power plants – AES Galabovo and Contour Global’s Maritsa East 3. These payables are reported to have reached a combined BGN1bn (€511mn).

In turn, the financing will be used to partly cover BGN400mn in payables of the two thermal power plants to state-owned coal miner Maritsa East Mines, also a BEH subsidiary.

In April 2015, NEK renegotiated its long-term power purchase agreements with AES and Contour Global on terms that were expected to save it some BGN100mn annually. However, a key condition for the agreement to enter into force is that NEK repays its debts. The deadline for the repayment was last moved to February 29.

On February 26, BEH did not comment whether the financing will arrive soon enough to keep the deal valid. The holding said that a committee will assess the two offers and will select a candidate that will be invited to negotiations. Meanwhile, Mediapool quoted sources as saying that BEH will ask the two US companies for a short extension, which is likely to be granted.

According to Petkova, NEK reduced its loss to BGN220mn in 2015 from BGN586mn in 2014. In addition, the company no longer accumulates tariff deficit.

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