Press releases

The financial effect of the implementation of the Reorganisation Plan, which was officially adopted in August by the company’s management, may account for approximately PLN 600 million by 2015. Ciech focuses on an improvement in its financial standing. In the first half of 2010, the Group’s revenues increased by 3 % and reached PLN 1.95 billion.

In August, the Management Board and the Supervisory Board of Ciech SA adopted a Reorganisation Plan of the Ciech Capital Group for 2010-2015, which was prepared based on recommendations of a reputable consultancy company, PwC Polska. The Plan provides for implementation of a number of reorganisation activities aimed at an improvement in the financial condition of the Ciech Group, repayment of some debts and increase in the growth potential.

The goal involves an increase in value for the shareholders

The total amount of net revenues and savings which may be achieved as a result of implementation of the initiatives provided for by the Plan is estimated at approximately PLN 600 million. The amount includes net revenues and savings, i.e. among others divestments from assets not related to the core business, e.g. real property or enterprises, abandonment of unprofitable production, employment optimisation, purchases centralisation, investment outlays optimisation. The Plan assumes, among others, that the shares and stocks in the following companies will be sold: Vitrosilicon, Alwernia, GZNF Fosfory, PTU, Zakłady Azotowe Tarnów, Transoda, Tranclean, Polfa (and Polfa Hungaria), Elzab, Ciech Service and the Polish Chemical Consortium. The divestment has been already partially completed: sale of shares in PTU, Zakłady Azotowe Tarnów, Elzab, shares in Ciech-Service and the Polish Chemical Consortium. – In consequence of sale of some shares, the Group will not only acquire cash, but also reduce involvement in the author’s supervision and increase its transparency for the investors  – said Ryszard Kunicki, CEO of Ciech SA. The adoption of the Reorganisation Plan also results from the obligation contained in the refinancing agreement with the banks financing the Ciech Group signed on April 26th, 2010. The Reorganisation Plan is supplemented by the initiatives aimed at capital acquisition – project involving the capital increase by issue of bonds convertible into shares or shares with the right to acquire the shares and plans involving the initial public offering of the Soda companies of the Group. – Now every scenario is possible depending on the market situation and capital acquisition costs. For example, the European Bank for Reconstruction and Development declared its interest in long-term financing of Ciech – said Ryszard Kunicki. The loan committee of the EBRD expressed initial consent to the participation in the financing of Ciech up to PLN 300 million. The terms and conditions will be subject to further negotiations and will depend on a further assessment of the project, instrument type and the anticipated transaction structure.

The refinancing process completed

On August 18th, 2010 the conditions precedent of the agreement between the Ciech Chemical Group and a consortium of seven banks on consolidation and refinancing of the debt of PLN 1.3 billion were satisfied. On August 24th and 25th all loan tranches were paid. Due to the foregoing, the Group acquired funds for the time necessary to implement the essential components of the reorganisation and acquisition of medium-term financing. The agreement with the banks, which was entered into in April, limited the number of the main banks financing the Group to 7 and resolved the matter of options.

Organika to strengthen its position

Despite the seasonal character of the core businesses of the Ciech Group, in the second quarter alone the Group’s income rose by 3 percent in comparison to the first quarter and reached PLN 988 million. In the first half of the year, the income reached PLN 1.95 billion and was by 3 percent higher than last year. The operating profit accounted for PLN 82 million. In the second quarter of 2010, EBITDA remained at the level from the period January-March 2010 and reached PLN 100 million. The Soda Division still contributes the most to the Group’s EBITDA (52 percent) and income (38 percent). However, the results of the said division were negatively affected by a decrease in prices and excessive supply of soda ash in the European markets, as well as an increase in the prices of raw materials. The decrease in margins at Soda Division, which was the main propelling force of the Group in 2009, is compensated by an increase in soda sales volumes and improvement in almost all indices in other segments of the Group. The environment of the Soda Division began to improve after the market reached the minimum at the turn of the first and second quarters. At the same time, the situation in the organic segment, especially in the epoxy market, considerably improved. A dynamic increase in prices up to record levels translated into an improvement in margins and further increase in the significance of Organika Division. In the first half of 2010, it increased the sales of all products  - TDI, PUR foams, epoxies, and at the same time improved its profitability. A decrease in the prices of fertilizer raw materials and an improvement in the relation between the production costs and sales prices positively affected the results of Agro Division. The first half of 2010 also observed an increase in demand for silicates in Poland and abroad.