Rafako's debt relief crucial, but this plan is currently impossible to implement

Debt relief of listed engineering company Rafako is crucial and would allow the company to attract a strategic investor, but this plan is currently impossible to realise, Rafako representatives assessed during the conference.

"This move [termination of mediation by JSW Coking Coal - PAP ed.] has deprived us of liquidity. It is sad that such a large and strong State Treasury company as a subsidiary of the JSW concern deprives Rafako of the last operating funds that would allow it to reach the end of the restructuring process," the CEO Maciej Stanczuk said.

"We have developed this plan as a management board. We have been negotiating with creditors, the largest Polish financial institutions for two months and it seemed that we were on the right track to bring the plan to fruition. It was supposed to result in the company's debt reduction and the possibility of attracting a strategic investor," he added.

A few weeks ago, Rafako reported that JSW Coking Coal had unilaterally terminated the mediation before the general prosecutor's office aimed at signing a settlement related to the construction of the cogeneration plant in Radlin.

At the time, JSW Coking Coal announced that it was deducting a cash deposit of around PLN 20 million (EUR 4.7 mln) from Rafako and initiating the procedure of using a bank guarantee, in the amount of around PLN 35 million (EUR 8.2 mln).

"The plan that the board has been working on (...) without debt reduction is impossible. It is impossible to attract a strategic investor and, as a result, to return Rafako to the market. This plan has become impossible to implement," the CEO said.

According to the management, the company's debt reduction is a key issue that would allow Rafako to find an investor.

Rafako's supervisory board appointed Maciej Stanczuk to the management board in June and entrusted him with the duties of president in June.

As reported at the time, Stanczuk's task was to bring about the conversion of the company's debt and to finalise the transaction with a potential strategic investor who had expressed interest in investing in the company.

"Being appointed to the board, I was obliged to sign a letter of intent with the investor. I introduced the investor to government agencies and this investor did not seem to be met with interest (...)," the CEO said.

"As I was asked not to sign the letter at this stage the matter died. Rafako's supervisory board, on the other hand, was informed about it," he added.

According to Rafako Innovation's CEO Jacek Balcer, Rafako currently has PLN 470 million (EUR 110.2 mln) of liabilities under the arrangement.

"To this must be added the payment of the guarantee from Alior, so the liabilities grow to about PLN 500 million, plus the current debt of about PLN 70 million to the Lithuanian company and PLN 100 million of state aid," Balcer said.

On Thursday, Rafako announced that it had filed for the company's bankruptcy.

doa/ ao/ han/