JW Construction enters the bourse through the back door

JW Construction will soon enter the Warsaw Stock Exchange (WSE), but not by the usual route. Last week the company signed a letter of intent with Sosnowiec-based Energopol-Południe to merge, helping it to maintain its leading position on the residential market. The acquisition gives JW Construction a back-door entrance to the bourse.

Energopol wants to increase its capital by issuing 33.3 million shares at zł.36 each, directed toward current shareholders and other prospective investors, as well as toward Józef Wojciechowski, JW Construction Holding's main shareholder. Wojciechowski will gain over 60 percent of the new company's shares via the deal.

The companies will sign an agreement on November 20, assuming the deal successfully passes the required legal and financial audits and gains approval from the regulator and from shareholders.

The merger will enable JW Construction to expand its activities in the south of the country. The company will also begin projects such as road construction, which fall outside its residential specialty.

"The fact that we have been looking for different solutions to strengthen the company and provide a cash injection is not a secret," said Józef Wojciechowski, chairman of the supervisory board at JW Construction. "We have considered different options but our negotiations resulted in agreement with Energopol. We have reached a solution which initially satisfies both parties," he added.

Wojciechowski revealed that he had been close to signing two other deals - one with a Spanish developer, the other with Merrill Lynch Fund - but withdrew. This time both Wojciechowski and Zbigniew Jakubas, the largest shareholder of Energopol, promised that the transaction would be finalized by the end of the year.

The official announcement of the merger followed a wave of speculation in the media. One day before the announcement, Energopol's shares rocketed by 30 percent. The Financial Supervisory Commission wants to investigate the reasons for the rapid increase, since using controlled media leaks to manipulate share prices is illegal. Lech Tomasz Tomkowski, president of Energopol, denied that any such thing had occurred, saying that too many people knew about the merger, which had taken months to prepare, and that it had been impossible to keep secret.