CMS has successfully advised Grupa Azoty Polyolefins on both the financing and implementation of the Police Polimery project – the largest investment project in the chemical industry in Poland and Central and Eastern Europe (CEE). The estimated project investment amounts to USD $1.8 billion and construction works, which are being undertaken by Hyundai Engineering Co., started in the first quarter of 2020.
The CMS Transaction Team assisted companies from the Azoty Group on the negotiation and execution of transaction agreements with Grupa Lotos S.A., as well as two Korean investors – Hyundai Engineering Co. and Korea Overseas Infrastructure & Urban Development Corporation (KIND). According to the concluded investment agreements, Grupa Lotos will invest PLN 500 million in the Polimery Police project, including a PLN 300 million cash contribution in consideration for taking up 17.3% of the shares in Grupa Azoty Polyolefins and PLN 200 million in the form of a subordinated loan.
The financial contribution of Hyundai and KIND will amount to a total of USD $130 million (approx. PLN 520 million), of which Hyundai will invest USD $73 million in consideration for taking up 16.63% of the shares in Grupa Azoty Polyolefins. KIND will invest USD $55 million (including USD $5 million in consideration for taking up 1.14% of the shares in Grupa Azoty Polyolefins and USD $52 million in the form of a subordinated loan).
Furthermore, the CMS Banking and Finance Team also advised Grupa Azoty on debt financing, totalling over USD $1 billion, from a consortium of 11 international and Polish financial institutions, including: PKO BP SA, Bank Pekao SA, Bank Gospodarstwa Krajowego, Alior Bank SA, PZU SA, Bank Ochrony Środowiska SA, Santander Bank Polska SA, BNP Paribas Bank Polska SA, European Bank for Reconstruction and Development, mBank SA and Industrial and Commercial Bank of China (Europe) SA (Polish branch).
CMS also assisted Grupa Azoty Zakłady Chemiczne “Police” S.A. with their public offering, which took place in accordance with the prospectus approved by the Financial Supervision Authority on 5 November 2019. The total obtained was PLN 501 million, which is intended to fund the Polimery Police project.
CMS also provided ongoing legal services to Grupa Azoty Polyolefins in relation to the implementation of the Polimery Police project, including the EPC contract and the technology licensing agreements concerning the technology that will be used in the production plant being built in Police.
The work of the CMS Transactions and Capital Markets Teams was managed by partner Rafał Zwierz. The process of obtaining the equity financing and negotiating the agreements with Grupa Lotos, Hyundai and KIND was led on an on-going basis by Olga Czyżycka. Katarzyna Grodziewicz and Magdalena Zmysłowska, specialising in capital markets law, advised Grupa Azoty Zakłady Chemiczne “Police” in connection with the secondary public offering. In addition, the following persons participated in the work of the team: Monika Szczotkowska, Michal Sowiński and Natalia Szurnicka.
The CMS Competition Team, under the supervision of partner Małgorzata Urbańska and with the support of Agnieszka Starzyńska and Krzysztof Sikora, was responsible for obtaining the antitrust clearance for the purpose of the transaction. CMS represented all parties to the transaction as part of the proceedings conducted by the Office of Competition and Consumer Protection.
The combined CMS Banking and Finance, and Energy and Infrastructure Project Teams, advised on obtaining financing as part of the project finance formula. The work of this project team was managed by partners Michał Mężykowski, Marcin Bejm and Jakub Wieczorek, who were assisted by: Michał Andruszkiewicz, Monika Kowara, Mikoł Markiewicz, Jan Radziuk, Hubert Wiśniewski, Roksana Pietrzak, Paweł Ura, Wojciech Szopiński, Anis Ben Amer and Piotr Gałązka. In addition, partners Tomasz Minkiewicz and Piotr Ciołkowski were involved in the project.
Tax advisory services were provided by partner Andrzej Pośniak and Małgorzata Sajkiewicz, supported by Rafał Dostatni.