Latvenergo AS announces procurement of bank loans

Latvenergo AS announces procurement for attracting borrowed capital in the form of bank loans. The funds are intended for financing of 2014-2016 investment programme and for refinancing needs in order to increase the Group value in the long-term. At the moment, the main investment projects implemented by Latvenergo Group include Kurzeme Ring construction project of the transmission system and an extensive programme of distribution network system, as well as Daugava HHPs hydropower unit reconstruction programme. The previous procurement in the form of bank loans was implemented in 2009.

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| Source: Latvenergo
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Riga, 2013-12-28 07:43 CET (GLOBE NEWSWIRE) -- Yesterday on 27 December, Latvenergo AS announced negotiation procedure for conclusion of loan agreements with the banks for the total amount up to EUR 150 million (LVL 105 million).

The subject of the procurement is divided into two procurement parts – the first procurement part is for conclusion of the loan agreement up to EUR 100 million with 5 year repayment term with an option to extend the loan repayment term by 2 years and the second procurement part is for conclusion of  the loan agreement up to EUR 50 million with 7 year loan repayment term.     

According to the Law On the Procurement of Public Service Providers the procurement is organized in the form of negotiation procedure. The selected form of procurement procedure – negotiation procedure with publication of invitation to participate – provides all interested parties (banks) with an equal opportunity to submit their bids by promoting fair competition and giving Latvenergo AS the opportunity to attract bank loans on optimal, mutually acceptable terms of loan agreement to both contracting parties and for the lowest possible price. The applications for negotiation procedure must be submitted by 28 January 2014. 

Attraction of loans is organized within the borrowing plans and is intended for financing the investment programme of Latvenergo Group, which is based on the long-term strategy of Latvenergo Group. Yearly capital investments are planned in the amount of approximately LVL 200 million (EUR 285 million) and their implementation is partially financed by own funds and partially by the borrowed capital.         

It is planned within the investment programme to make capital investments in generation assets, in distribution and transmission network assets. At the moment, the main projects implemented by Latvenergo Group include Kurzeme Ring construction project of the transmission system and an extensive programme of distribution network system, as well as Daugava HHPs hydropower unit reconstruction programme. The aim of the projects is to ensure qualitative, safe and reliable service to our clients. In 2012 capital investments of Latvenergo Group amounted up to LVL 185.7 million (EUR 264.2 million). 

The long-term strategy of Latvenergo Group is focused on increasing the value of Latvenergo Group in the long-term, maintenance and reconstruction of infrastructure and production assets, and a competitive return on the investments.

Latvenergo AS attracts borrowed capital on regular basis by attracting funds for financing of capital investments for several years. Previously, procurement of loan attraction in the form of commercial bank loans was organized in 2009 by ensuring the necessary borrowed capital for financing of 2010-2012 investment programme including the necessary financing for reconstruction of the second power unit of TEC-2. As a result of the procurement procedure in 2010 the loan agreements were signed with Nordea Bank Finland Plc Latvia branch, AS DnB NORD Banka, Swedbank AS and AS SEB banka for the total amount – EUR 90 million (LVL 63 million).          

As previously stated, within the framework of the borrowed capital plans Latvenergo AS, using fund raising alternatives, in the end of the last year commenced public issuance of bonds in Euro currency. Within the bonds issuance programme of  LVL 85 million (EUR 120 million), Latvenergo AS has issued bonds in the nominal amount of EUR 105 million (LVL 74 million) that similarly to the announced procurement of bank loans provide investment programme cofinancing of Latvenergo Group.

In the first 9 months of 2013 the profit of Latvenergo Group reached LVL 614 million (EUR 874 million), equity - LVL 1.41 billion (EUR 2 billion), but total assets – LVL 2.44 billion (EUR 3.48 billion). Accordingly, the equity ratio was 58% that indicates significant dominance of equity over liabilities. At the same time, the ratio depicts on the average level of borrowings and on stable capital structure adequate to the industry as evidenced by investment grade credit rating Baa3 with a stable outlook reconfirmed by the international credit rating agency Moody's Investors Service to Latvenergo AS in March this year.

Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 67 728 239
E-mail:
investor.relations@latvenergo.lv

www.latvenergo.lv

About Latvenergo

Latvenergo Group is a pan-Baltic energy company, engaging in electricity and thermal energy generation and supply, electricity distribution services and management of transmission system assets. Latvenergo Group holds one-third of the entire Baltic electricity market, thus ensuring its leadership in the Baltic electricity supply. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa3/stable.

Latvenergo Group includes the parent company Latvenergo AS (electricity and thermal energy generation and supply) and its subsidiaries Latvijas elektriskie tīkli AS (management of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity  supply in Estonia), Elektrum Lietuva UAB (electricity  supply in Lithuania) and Liepājas enerģija SIA (thermal energy generation and supply, electricity generation), as well as Elektrum Latvija SIA (electricity supply), a subsidiary of Elektrum Eesti OÜ.