PGG-KHW merger goes through. Secures PLN 1 bln financing

The merger of Polska Grupa Górnicza (PGG) with Katowicki Holding Węglowy (KHW) has been completed, Poland's ministry of energy said. The decision has been approved by Poland's antitrust watchdog UOKiK. The government has also finalized agreements with PGG-KHW creditors regarding suspending and extending the repayment period. “First of all we got a two-year suspension of installment repayment, secondly a prolongation of repayment by 5 years so the installments will be lower and thirdly, following the negotiations with banks we got the effects of some PLN 200 million,” Energy Minister Krzysztof Tchórzewski said. KHW has some PLN 1.4 billion debt. Under the merger agreement, PGG will acquire four KHW mines and in turn create EU's largest coal producer. Poland decided to incorporate flailing KHW into the bigger PGG, which is in better financial shape in an attempt to save Polish coal mining sector. Still, the group will need PLN 1 billion in financing, which has been secured. “If we continue to lead the restructuring process according to our model, further capitalization won't be needed. If it weren't for the merger, PGG would not need capitalization,” PGG CEO Tomasz Rogala said. The funds will come from a group of state-owned utilities. Energa and PGNiG will provide PLN 300 million each, while Enea and PGE will capitalize the venture with PLN 100 million each. The remaining funds will be provided by the state-run TFI Silesia investment vehicle.