Bulgaria’s BEH Signs EUR 535 M Loan Deal to Repay Debt to Units of AES, ContourGlobal

State-owned Bulgarian Energy Holding (BEH) group has agreed a bridge loan of EUR 535 M to repay debt of its subsidiary NEK to the local units of U.S.-based AES Corporation and ContourGlobal, Energy Minister Temenuzhka Petkova said on Monday.

BEH had signed the bridge financing contract with a consortium comprising Ваnса IMI S.p.A. - London Branch, Bank of China Limited - Luxembourg Branch and J.P. Morgan Securities. The consortium was ranked first in the evaluation of the binding offers submitted by two candidates in February.

The bridge loan will be refinanced through placement of a bond issue on international capital markets within a year. A source close to the deal has said that J.P. Morgan and Banca IMI will be lead managers of the bond issue, while Bank of China will participate only in the bridge loan, according to Reuters.

Interest on the bridge loan was in line with the current market conditions, Petkova said at a news conference, presenting the financial results of the holding group and the companies within it. She declined to give further details, citing confidentiality clauses in the agreement, but said the loan had been extended without a state guarantee .

Petkova also said the bridge financing was large enough to repay debt owed by the public power supplier National Electricity Company (NEK) to power plants AES Galabovo and ContourGlobal Maritsa East 3.

The sum is lower than the EUR 650 M initially sought by BEH.

BEH will withhold BGN 364 (EUR 186 M) from the loan equivalent to the combined total debt owed by the two coal-fired power plants to Maritza East lignite mines and will transfer the remainder to NEK for repayment of outstanding company debt to AES Galabovo and ContourGlobal Maritsa East 3.

As of late February, NEK owed an estimated total of BGN 950 M (EUR 485 M) to the two power plants, while the plants' outstanding debt to Maritsa East lignite mines was estimated at BGN 340 M (EUR 174 M).

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