The firm said in a press statement commenting on draft resolutions for the October 15 EGM, that it plans to raise some PLN 250 m from a share issue addressed to bondholders, some PLN 235 m from a share issue addressed to selected investors as well as at least PLN 330 m from asset disposal. The firm will ask its shareholders to approve an ex-rights issue of up to 431,034,000 M-series shares and an ex-rights issue of between 300,000,000 and 468,988,156 N1-series shares. The two should raise a total of PLN 485 m. The EGM will also vote a rights issue of up to 208,461,630 N2-series shares. It will be only carried out if not all N1- series shares find a buyer and should bring some PLN 105 m. Moreover, shareholders will also vote a conditional ex-rights issue of up to 271,663,288 subscription warrants addressed to the entity which acquires
N1-series shares and is a holder of at least a 15% stake in the company. Polimex will also ask for shareholders' approval for the disposal of Polimex- Mostostal S.A. Zaklad ZREW Oddzial Transformatory based in Lodz, Oddzial Ocynkownia Debica and Oddzial Ocynkownia Czestochowa. From these disposals as well from real estate plots disposals the management expects to raise at least PLN 330 m. The rights issue day for N2 share series was set on 22 November. The price of shares of M, N1, N2 and oseries is going to be set by the management in upcoming weeks.
It appears to us that the calling of EGM is a consequence of creditors' and shareholders' preliminary consent to the provisions of Polimex's financing strategy. At end-August Polimex-Mostostal estimated its capital needs at around PLN 500 m. The firm said back than that it would propose PLN 300 m in equity issued to bondholders in a debt for equity swap and would additionally raise cash from both a rights issue for current shareholders and an ex-rights issue for one or several investors interested in capitalizing the firm and taking a significant portion in capital. We believe that the fact of calling the EGM implies that the plan of financial restructuring of the company is likely to be approved by the company. We expect that the final price of shares issue in particular share series is likely to be set with some 10-15% discount to current market price (PLN 0.58). We believe the disposals of real estate plots or part production segment may surprise on downside and may not bring in expected PLN 330m by the management.