Current Report No.:18/2020
Content of the report:
The Management Board of Boryszew S.A. (“Company”, “Issuer”) in connection with the preparation of separate and consolidated financial data for the purposes of the Issuer’s report for Q1 2020, publishes information on a possible breach of the financial covenant regarding the debt-to-EBITDA ratio, i.e. the net debt ratio to EBITDA (in one case gross debt to EBITDA), which will be tested based on published consolidated financial statements at the end of Q1 2020, resulting from loan agreements concluded between the Company and the Banks financing the Group.
Pursuant to the provisions of existing contracts, the Company undertook to maintain during the loan period, as at the end of each calendar quarter, the net debt / EBITDA ratio for consolidated financial data at a level not higher than 3.50, whereas according to the initially estimated results this level will be 3.76 (respectively, the gross debt / EBITDA financial ratio for consolidated financial data at a level not higher than 3.70, however, according to the initially estimated results, this ratio will be 4.19).
Additionally, in two subsidiaries of the Automotive Segment (BAP Group) it is possible to violate the covenant as a result of not reaching the set level of profitability ratio at the level of profit on sales of the automotive segment of the Boryszew Capital Group, which will be tested based on published consolidated financial statements at the end of I quarter of 2020, and thus a violation of one of the conditions of the loan agreement for a common credit limit, the guarantor of which is Boryszew S.A.
The reason for the failure to achieve the ratios declared in the loan agreements was, in particular, the economic downturn and logistical constraints significantly affecting the sustainability of the supply chain and production constraints in the automotive industry due to the development of the coronavirus epidemic. The above resulted in the need to temporarily suspend production activity in the production plants of the Maflow Group and BAP Group companies, about which the Issuer informed, among others in Current Report No. 5/2020.
In connection with the formula for calculating the ratio, assuming the calculation of the EBITDA level for the next four quarters, the Issuer estimates that the level of the ratio will remain above those agreed in the Agreements at least until the end of 2020. Bearing the above in mind, the Company’s Management Board applied to the lending banks for withdrawing from any sanctions resulting from loan agreements related to the breach of the aforementioned financial covenant and temporary change of the required financial ratios. According to the initial information regarding the deadlines for taking decisions on the application, obtained from the Banks concerned, the Company should receive information about their decisions in July this year. The Issuer will inform you about subsequent significant events related to the circumstances described above in the form of appropriate reports.
The results for Q1 2020 will be presented in the extended consolidated quarterly report of the Boryszew Capital Group for Q1 2020, the publication of which is scheduled for June 29, 2020.
The Company explains that:
- the term EBITDA is defined as the EBITDA of the Boryszew Capital Group
- the term net debt is defined as the interest liabilities of the Boryszew Capital Group less cash and cash equivalents of the Boryszew Capital Group
- the term gross debt is defined as interest liabilities of the Boryszew Capital Group.
The above definitions and the methodologies for their calculation are the same as the definitions and methodologies for calculating these indicators in the previous periodic reports of the Issuer.
Signatures:
Piotr Lisiecki – President of the Management Board
Translation from the original Polish version.
In the event of differences resulting from the translation, reference should be made to the official Polish version.