Energis seeks debt capital for expansion

Energis Polska has begun fishing for banks to supply $10 million-$15 million in debt capital to fuel its further customer acquisition and expansion plans in the first half of next year, as its main investor starts to pay back all of its outstanding debt, the company's president said last week. U.K.-based National Grid, Energis Polska's main investor, offered the company a bid of confidence at a shareholders meeting in late August when it agreed to repay in advance of maturity the €125 million loan that the telecom solutions provider owes the European Bank for Reconstruction and Development (EBRD). National Grid's move will make Energis Polska one of the few debt-free companies in a European telecom sector inhabited by debt-burdened firms. "That creates a new investment environment," said Jarosław Mikos, the president of Energis Polska. As a debt-free firm, Energis's company executives and financial adviser Salomon Smith Barney will be able to easily secure new loans needed to expand its market share in Poland, he said.

Energis wants to seal a loan agreement by the end of the year, after which time it would likely seek new loans incrementally as needed, Mikos said. But the details of the loan, in terms of its maturity, exact size and fees have not yet been decided. These recent events bode well for the company, which in February was forced to financially fend for itself after its U.K.-based parent company pulled out of its overseas commitments due to money troubles at home. Now, Energis Polska, which plans by year-end to break-even in its earnings before interest, taxes, depreciation and amortization (EBITDA), can operate virtually unencumbered by the credit worries that dog its peers, Mikos said. "The (poor) climate in the telecom sector is quite visible, (but) we are driving revenue up, and we'll be self-sufficient by the end of the year," he said. At the beginning of the year, Energis Polska recorded $300,000 in revenue. By the third quarter the figure had grown to $1.5 million. After the EBRD's loan was paid, Energis Polska would have roughly $200 million in equity and $16 million in the bank to weather any further downturns in the telecom market, Mikos said. Earlier this year, TDC Tele Danmark, the Danish telecom operator, was considering a possible investment in Energis Polska, but has recently withdrew its offer for undisclosed reasons.