MVM to borrow €347 million to finance E.ON purchase

MNB

An extraordinary general meeting of 99% state-owned Hungarian energy group MVM on Friday unanimously approved a proposal for the company to take out euro- and forint-denominated loans worth about HUF 104 billion from domestic and international institutions. With these decisions every condition has been set to close the purchase of Hungarian gas units of Germany's E.ON on September 30, according to a company statement.

MVM said that after the closing of the transaction “E.ON Gas Storage and E.ON Gas Trade will, already in national ownership, secure the safe supply of Hungary with natural gas, and will contribute to growth as well as to keeping prices at affordable levels.” The statement also said that the loans secure the financial coverage for the further growth of the group.

In March, MVM signed an agreementto purchase the gas units of the German utilities company for about €870 million. The final price will depend on the inventories at the time of closing.

MVM will sign a €66.7 million loan agreement with ING Bank as well as a HUF 84 billion club loan with a banking syndicate comprising OTP Bank, Unicredit Bank, Raiffeisen Bank, Volksbank, K&H Bank and MKB Bank.

The terms of the loans are in line with the current money market standards as well as with the conditions in MVM's existing long-term loan contracts, and are favorably priced, according to the company statement, though neither maturity period or other terms of the new loans were revealed.

MVM noted that its biggest shareholder, the Hungarian National Asset Management Company (MNV), recently agreed to grant it a HUF 71 billion shareholders' loan to help the financing for MVM's E.ON transaction until a capital raise takes place. A proposed budget amendment before Parliament includes a HUF 71 billion capital raise for MVM.

No statement was released on the €300 million cooperation agreement MVM signed with the Bank of China banking group on Monday that includes a €200 million loan for general corporate-finance purposes. The loan is for three plus, with option years thereafter.

MVM had HUF 119 billion cash among its current assets at the end of 2012 according to its consolidated annual report. It paid HUF 10 billion in dividends to the state from last year's after-tax profit of HUF 73.6 billion. Net assets stood at HUF 621 billion of the HUF 1,008 billion consolidated balance sheet total at the end of 2012. Long-term loans reached HUF 69 billion and short-term loans were HUF 59 billion.

The state gave a guarantee up to 80% of the price to the deal under an amendment to the 2013 budget act in March. The amendment set an absolute threshold of the guarantee -- good until September 30, 2013 -- at HUF 256 billion or €851 million at the current exchange rate.

ADVERTISEMENT

Századvég raises GDP forecast to 7.8% Analysis

Századvég raises GDP forecast to 7.8%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

New editor-in-chief at Betone Studio Appointments

New editor-in-chief at Betone Studio

Budapest leaders make public transport free for under-14s City

Budapest leaders make public transport free for under-14s

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.