CEZ has renewed its revolving loan

CEZ Power Company signed an official agreement yesterday, thus renewing a revolving loan which had originally been concluded in October 1996 for the amount of $ 200 million repayable over a 5-year period.

The credit was renewed by another five years and the volume was reduced to $ 70 million, because the company has already undergone the period characterised by extensive investment in renovation projects and measures aimed at desulphurising its coal-fired power plants, but also large investments in nuclear machinery and equipment. The contractual parties agreed on an interest rate of 0.60 % above LIBOR, which can be drawn down both in dollars and euros. The revolving loan was arranged by Sumitomo Mitsui Banking Corporation.

This type of loan makes it possible for CEZ to draw down funds according to the company's immediate needs and then repay them, which could be done repeatedly. The structure of the bank consortium and the credit conditions confirm the prestigious position of CEZ on international financial markets. The confidence on the part of investors and banks was further strengthened by the investment grading BBB+ and Baa1, which CEZ had received from renowned rating agencies Standard and Poor´s and Moody´s.

It has become evident that investors regard CEZ as a creditworthy business entity, even after the postponement of its privatisation and after the attack on the WTO, when the world capital markets are generally more prudent and the power industry is recovering from the economic failure of ENRON. In the current turbulent situation, financial institutions see CEZ as a steady enterprise, which is flattering, but also means a certain commitment for the future. The newly signed agreement is in fact a gesture of acknowledgement", said Mr. Jaroslav Suk, the head of the CEZ Finance Section, and added: The loan will enable CEZ to provide for operative funding of the company needs. We also plan to use these funds for managing short-term liquidity. CEZ currently does not need any major long-term loans, as it has already started to reduce its overall debt. A year ago, after finalising its extensive investment programme carried out in the nineties, CEZ started to generate free funds. Consequently, we are now able to keep reducing our debt and may even think of paying off dividends.

The success of the transaction can also be substantiated by the fact that the syndicate of the loan consists of 10 banks from 5 countries (Sumitomo Mitsui Banking Corporation, Ceska sporitelna, Citibank, Credit Lyonnais Bank Praha, Deutsche Bank Aktingesellschaft Filiale Prag, HSBC Bank, ING Bank, Mizuho Bank Nederland, Sanpaolo IMI and Magyar Kulkereskedelmi Bank), who offered a combined credit of $ 95 million. However, CEZ had only requested $ 70 million, which is why the offers of the individual banks were curtailed.

Ladislav Kriz, CEZ Press Officer

31. 1. 2002