Position of the Management Board of Grupa LOTOS S.A. Regarding the Company’s Standing
Report no. 60/20082008-11-27
Further to Current Report No. 59/2008 of November 24th 2008, the Management Board of Grupa LOTOS S.A. hereby presents supplementary information on the Company’s financial standing. Effect of FX Changes
In the Management Board’s opinion, the recent strong fluctuations on the currency markets should be viewed as favourable for the Company due the depreciation of the currencies in which LOTOS’s capital expenditure is denominated (EUR, PLN) and the concurrent appreciation of the currency of the loan and the operating margin (USD). This improves the relation of the funds available to finance the 10+ Programme – from both the external sources (loans) and the internally generated cash flows – to the capital expenditure.
Loan Agreements for the Financing of the 10+ ProgrammeThe Management Board of Grupa LOTOS S.A. would like to emphasize that since execution of the agreements concerning the financing of the 10+ Programme, cooperation with the lenders has been smooth and there has not been any failure on the part of these financial institutions to meet their commitments towards Grupa LOTOS S.A. The loan to finance the 10+ Programme is a long-term facility involving 17 renowned financial institutions. The repayment of the investment loan will start in 2011 and will continue until 2021. The loan is secured solely with the assets and cash flows of the Gdańsk refinery; the loan collateral does not involve assets and cash flows related to production activities, the service station network or other assets or cash flows outside of the Gdańsk refinery, the shares of the subsidiaries of Grupa LOTOS S.A or Grupa LOTOS S.A. shares. Under the executed loan agreements, the stock-exchange price of the Grupa LOTOS S.A. shares has no bearing on the enforceability of the collateral.The short-term loans advanced to the Company, other than those contracted under the loan agreement of June 27th 2008, will be repaid by the end of 2008 using funds available under the facilities extended for the 10+ Programme (for this purpose the Company may use the funds available under the investment loan). Hedging Strategy The Company’s hedging strategy designed to secure stable cash flows, necessary to finance LOTOS’s own share in the financing of the 10+ Programme, is being implemented as planned and has been agreed upon with the lending institutions providing financing for the 10+ Programme. Taking into account the terms and conditions of the loan agreements and the agreements governing hedging transactions (absence of margin calls, i.e. the necessity to regularly cover contract deficit with cash), the Company is not exposed to any material risks of mismatch between its cash flows and maturities of the hedging instruments. Basis for the publication of this current report: Art. 56.1.1 of the Public Offering Act – inside information.