LOTOS Asfalt, a LOTOS Group company, and a syndicate of eight financial institutions, including six banks (PEKAO S.A., Bank Gospodarstwa Krajowego acting under the Polish Investments scheme, PKO BP S.A., Societe Generale S.A., BZ WBK S.A. and Bank Millennium S.A.) and two PZU Group companies (Powszechny Zakład Ubezpieczeń S.A. and Powszechny Zakład Ubezpieczeń Na Życie S.A.), have signed credit facility agreements to finance the construction of an advanced Delayed Coking Unit (DCU) with auxiliary installations on the premises of the refinery in Gdańsk (the “EFRA Project”). EFRA is an acronym in Polish "effective refining" - efektywna rafinacja).

Pursuant to the agreements, the syndicate will grant LOTOS Asfalt an investment facility of up to USD 432m, representing 70% of the project value, and a working capital facility of up to PLN 300m. The balance of capital expenditure on the project will be financed with the LOTOS Group’s internally generated funds. Total expenditure on the EFRA Project is estimated at PLN 2.2bn.

The EFRA Project’s units will turn out approximately 900 thousand tonnes of high-margin products per year (primarily diesel oil and aviation fuel).

The project will contribute to an increase in refining efficiency, or the crude distillate yield, and thus to a margin improvement (by approximately USD 2/bbl).

The credit facility has been advanced under the ‘project finance’ model until December 2024. In order to raise additional funds for the EFRA Project, towards the end of 2014 Grupa LOTOS S.A. completed a successful share issue on the Warsaw Stock Exchange, thus raising almost PLN 1bn. The State Treasury acquired 53% of the new shares, while also concluding an assistance agreement with Grupa LOTOS S.A. and committing PLN 530m, partially to finance the EFRA Project. The project will also be financed with LOTOS Asfalt’s internally generated funds. When negotiating the financing of the EFRA Project with banks, Grupa LOTOS proved that the project promised high profitability, guaranteeing the security of timely repayment of future liabilities.

“EFRA naturally completes the full technological cycle of crude oil processing, enabled by the construction of modern refining units under the 10+ Programme. The high competencies our management and other staff allow us to successfully implement investment projects and consistently strengthen our market position,” says Paweł Olechnowicz, President of the Management Board of Grupa LOTOS S.A. “Thanks to the higher crude distillate yield, we will achieve higher margins, offer higher volumes of high-demand products and, consequently, record improved performance, delivering measurable benefits to our shareholders.”

“I am very glad that, together with other Polish financial institutions, we can financially contribute to this project, which is unique in terms of both structure and scale. All the more so because Bank Pekao has been entrusted with the role of the coordinator, arranger and agent for this strategic project. The transaction attests to strong mutual trust among the partners, as well as the knowledge and understanding of Grupa LOTOS’ needs by the Polish banking sector,” says Andrzej Kopyrski, Vice-President of the Management Board of Bank Pekao, responsible for corporate banking.

For Grupa LOTOS S.A. and LOTOS Asfalt, the implementation of the EFRA Project will materially strengthen their competitive position on the European refining market. The launch of the new units will result in a higher output of high-margin fuels.

The investment programme pursued by the LOTOS Group, providing for the expansion of its production capacities and development of the Group subsidiaries, is a model project in Poland. Its focus is on enabling the Group to steadily gain a technological edge and carve out an increasing market share, especially in areas promising the highest possible margins. The EFRA Project’s units will turn out approximately 900 thousand tonnes of high-margin products per year.

EFRA is undoubtedly an enormous challenge for LOTOS Asfalt, taking it to a new level of development.

Communications Office
Grupa LOTOS S.A.
ul. Elbląska 135,
80-718 Gdańsk,
tel. 58 308 87 31, 58 308 83 88, 58 308 83 55,
e-mail: media@grupalotos.pl