Integrated
Annual Report 2011

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Grupa LOTOS S.A. - Integrated Annual Report 2011
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34. Interest-bearing borrowings and other debt instruments

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PLN '000 Dec 31 2011 Dec 31 2010
(restated)
Bank borrowings 7,368,073 6,293,802
Non-bank borrowings 23,556 32,992
Total 7,391,629 6,326,794
including:    
non-current 4,983,889 4,403,453
current portion 2,407,740 1,923,341

  

Borrowings and other debt instruments by lender

PLN '000 Dec 31 2011 Dec 31 2010
(restated)
Non-current portion    
Kredyt Bank S.A. 14,988 20,987
Pekao S.A. 24,530 27,590
PKO BP S.A. 16,625 18,125
National Fund for Environmental Protection and Water Management 12,056 18,556
Provincial Fund for Environmental Protection and Water Management of Gdańsk 5,000 -
Raiffeisen Bank Polska S.A. - 2,000
Bank Ochrony Środowiska S.A. 36,902 36,902
as at its acquisition-date - 7,936
Bank syndicate (2)** 3,513,826 3,120,146
Bank syndicate (3)*** 1,273,067 1,020,870
Bank syndicate (5)***** 86,895 130,341
Total non-current portion 4,983,889 4,403,453
Current portion    
Kredyt Bank S.A. 7,607 6,000
Pekao S.A. 179,178 186,263
ING Bank Śląski S.A. 5 32,036
PKO BP S.A. 246,656 110,872
National Fund for Environmental Protection and Water Management 6,500 6,500
Raiffeisen Bank Polska S.A. - 1,985
DnB NOR Bank ASA - 23,624
BRE Bank S.A. 33,251 3,207
Nordea Bank Polska S.A. 18,564 -
Bank syndicate (1)*  1,369,959 1,187,413
Bank syndicate (2)** 225,715 91,439
Bank syndicate (3)*** 91,054 37,214
Bank syndicate (4)**** 169,585 201,979
Bank syndicate (5)***** 43,573 43,474
Bank syndicate (6)****** 193,104 -
Funds in bank deposits securing payment of interest and principal instalments******* (177,011) (8,665)
Total current portion 2,407,740 1,923,341
Total 7,391,629 6,326,794

*Bank syndicate (1): Pekao S.A., PKO BP S.A., BRE Bank S.A., Nordea Bank Polska S.A.; on December 20th 2011, there was a change in the composition of the syndicate, which is further discussed below.
**Bank syndicate (2): Banco Bilbao Vizcaya Argentaria S.A., Bank of Tokyo-Mitsubishi UFJ (Holland) N.V., Pekao S.A., BNP Paribas S.A., Caja de Ahorros y Monte de Piedad de Madrid, Credit Agricole CIB (formerly Calyon), DnB Nor Bank ASA, DnB Nord Polska S.A., ING Bank Śląski S.A., KBC Finance Ireland, Kredyt Bank S.A., Nordea Bank AB, PKO BP S.A., The Royal Bank of Scotland plc, Société Générale S.A., Bank Zachodni WBK S.A., Rabobank Polska S.A., Bank Gospodarki Żywnościowej S.A. and Sumitomo Mitsui Banking Corporation Europe Ltd.
***Bank syndicate (3): Banco Bilbao Vizcaya Argentaria S.A. and BNP Paribas S.A.
****Bank syndicate (4): Pekao S.A., PKO BP S.A., BNP Paribas S.A., ING Bank Śląski S.A., Nordea Bank Polska S.A., Rabobank Polska S.A. and Bank Gospodarki Żywnościowej S.A.
*****Bank syndicate (5): Pekao S.A. and PKO BP S.A.
******Bank syndicate (6): Nordea Bank Finland Plc. Lithuania Branch and Nordea Bank Polska S.A.
*******As at December 31st 2011 and December 31st 2010, the Company offset a financial asset (cash reserved for repayment of borrowings) against a financial liability under borrowings and in accordance with IAS 32 it disclosed the relevant net amount in the statement of financial position (the Company holds a valid legal title to set off the recognised amounts and intends to realise the asset and settle the liability simultaneously). The objective of this procedure is to reflect the expected future cash flows from settlement of two or more financial instruments.

  

Bank borrowings contracted by the Parent

As at December 31st 2011, the Company had drawn under the term facility USD 1,510,630 thousand (in nominal terms) (the equivalent of PLN 5,162,427 thousand, translated at the mid-exchange rate for USD quoted by the National Bank of Poland for December 31st 2011). As at December 31st 2010, the Company had drawn under the term facility USD 1,464,596 thousand (in nominal terms) (the equivalent of PLN 4,341,209 thousand, translated at the mid-exchange rate for USD quoted by the National Bank of Poland for December 31st 2010). The working capital facility was made available to Grupa LOTOS S.A. in the form of overdraft facilities which are used by the Company on an as-needed basis. By the date of these consolidated financial statements, funds drawn under the facility were used by Grupa LOTOS S.A. according to its needs.

Credit facility agreement for the refinancing and financing of inventories of Grupa LOTOS S.A.

On August 23rd 2011, Grupa LOTOS S.A. and a syndicate of four banks, comprising:

  • Pekao S.A. of Warsaw,
  • PKO BP S.A. of Warsaw,
  • BRE Bank S.A. of Warsaw,
  • Rabobank Polska S.A. of Warsaw,

executed an amending agreement to extend by 12 months, i.e. until December 20th 2012, the facility agreement for the refinancing and financing of inventories of Grupa LOTOS S.A. of December 20th 2007, providing for a revolving credit facility of USD 400m (PLN 1,148,520 thousand, translated at the mid-exchange rates quoted by the National Bank of Poland for August 23rd 2011).

The amending agreement executed pursuant to the credit facility agreement of December 20th 2007, which permitted extension of the credit facility term by an additional calendar year. Concurrently, as of December 20th 2011, Rabobank Polska S.A. ceased to be a party to the credit facility agreement. Pursuant to documents signed along with the amending agreement, as of that date its entire credit commitment was taken over by BRE Bank S.A. and Nordea Bank Polska S.A. of Gdynia. The other terms and conditions of the credit facility agreement of December 20th 2007 as well as its provisions concerning penalties do not differ from those commonly used in agreements of such type.

In connection with the borrowings referred to under Bank Syndicate (1), Bank Syndicate (2), Bank Syndicate (3) and Bank Syndicate (4), as further described above, Grupa LOTOS S.A. is required to meet a covenant of maintaining the Tangible Consolidated Net Worth at least at the level specified in both facility agreements.

In addition, in connection with the facility referred to under Bank Syndicate (1), the Company is also required to meet a financial covenant of maintaining the Loan to Pledged Inventory Value Ratio at a level not higher than specified in the facility agreement.

As at December 31st 2011, and December 31st 2010, the covenants were complied with.

Bank borrowings and other debt instruments as at December 31st 2011, by currency and by maturity

PLN '000 EUR facilities USD facilities NOK facilities PLN facilities 

Total
2012 219,540 1,976,983 - 211,217 2,407,740
2013 2,603 297,063 - 59,229 358,895
2014 2,603 405,466 - 74,553 482,622
2015 2,603 421,101 - 20,381 444,085
2016 - 459,145 - 17,606 476,751
after 2016 - 3,204,118 - 17,418 3,221,536
Total 227,349 6,763,876 - 400,404 7,391,629

The above table presents facilities by maturity.

Bank borrowings and other debt instruments as at December 31st 2010, by currency and by maturity

(restated)
PLN '000		 EUR facilities USD facilities NOK facilities PLN facilities

Total
2011 19,656 1,648,044 23,624 232,017 1,923,341
2012 2,334 238,365 - 61,006 301,705
2013 2,334 242,190 - 58,506 303,030
2014 2,334 330,567 - 27,093 359,994
2015 10,270 343,314 - 19,457 373,041
beyond 2015 - 2,986,580 - 79,103 3,065,683
Total 36,928 5,789,060 23,624 477,182 6,326,794

The above table presents facilities by maturity.

As at December 31st 2011, the average effective interest rate for the facilities (including USD- and EUR-denominated facilities) was approx. 2.44% (2.44% as at December 31st 2010). The average effective interest rate for PLN-denominated facilities (excluding the syndicated facilities of the Parent) was approx. 5.81% (4.81% as at December 31st 2010).

Borrowings and other debt instruments as at December 31st 2011:

Bank name; form of incorporation Registered office Facility amount as per agreement Outstanding amount
(current portion) (1) 		Outstanding amount
(non-current portion) (1) 		Maturity date Financial terms and conditions (interest rate, interest payment schedule, etc.) Type of security
PLN
('000)		 Currency
('000)		 PLN
('000)		 Currency
('000)		 PLN
('000)		 Currency
('000)		 Current
portion		 Non-current portion
Bank Syndicate (1) - - USD 400,000 1,369,959 USD 400,878 - - Dec 20 2012 - based on 3M or 6M LIBOR USD, depending on the interest period selected at a given time + bank’s margin registered pledge over inventories, registered pledge over bank accounts, assignment of rights under inventory insurance agreements, assignment of rights under inventory storage agreements, voluntary submission to enforcement
Bank Syndicate (2) - - USD 1,125,000 225,715 USD 65,853 3,513,826 USD 1,025,007 Oct 15 2012 Jan 15 2021 based on 1M, 3M or 6M LIBOR USD, depending on the interest period selected at a given time + bank’s margin mortgage, registered pledge over existing and future movables, registered pledge over bank accounts, assignment of rights under agreements for the implementation and management of the 10+ Programme, assignment of rights under insurance agreements relating to the Gdańsk refinery, assignment of licence and sale agreements with a value of over PLN 10,000 thousand per year, submission to enforcement
Bank Syndicate (3) - - USD 425,000 91,054 USD 26,468 1,273,067 USD 369,638 Oct 15 2012 Jan 15 2021 fixed interest rate
Bank Syndicate (4) - USD 200,000
or equivalent		 94,740 - - - Overdraft facility - 3M WIBOR + bank’s margin
74,565 USD 21,819 - - 3M EURIBOR + bank’s margin
280 EUR 64 - - 3M LIBOR USD + bank’s margin
Pekao S.A. Warsaw 300,000 - 2,842 - - - Overdraft facility (2) - 1M WIBOR + bank’s margin power of attorney over bank account, voluntary submission to enforcement
ING Bank Śląski S.A. Warsaw 100,000 - 5 - - - Overdraft facility (2) - 1M WIBOR + bank’s margin voluntary submission to enforcement
Bank Syndicate (5) Warsaw 340,000 - 43,573 - 86,895 - Dec 31 2012 Dec 31 2014 1M WIBOR + bank’s margin mortgage
Kredyt Bank S.A. Warsaw 60,000 - 7,607 - 14,988 - Dec 31 2012 Jun 30 2015 1M WIBOR + bank’s margin mortgage
PKO BP S.A. Warsaw 20,000 - 1,875 - 16,625 - Dec 31 2012 Dec 31 2019 1M WIBOR + bank’s margin mortgage
Pekao S.A. Warsaw 20,000 - 1,500 - 16,625 - Dec 31 2012 Dec 31 2019 1M WIBOR + bank’s margin mortgage
Nordea Bank Polska S.A. Gdynia 50,000 - 18,564 - - - Overdraft facility   1M WIBOR + bank’s margin blank promissory note
Pekao S.A. Kraków 26,837 EUR 7,060 2,604 EUR 589 7,809 EUR 1,767 Oct 31 2012 Oct 31 2015 1M EURIBOR + bank’s margin mortgage
Pekao S.A. Kraków 44,754 - 32 - 96 - Oct 31 2012 Oct 31 2015 1M WIBOR + bank’s margin mortgage
National Fund for Environmental Protection and Water Management Warsaw 35,000 - 6,500 - 12,056 - Dec 20 2012 Dec 20 2014 0.8 of the promissory note rediscount rate bank guarantee, blank promissory note
BRE Bank S.A. Warsaw 35,000 - 14,174 - - - Overdraft facility - O/N WIBOR + bank's margin blank promissory note
Provincial Fund for Environmental Protection and Water Management Gdańsk 5,000 - - - 5,000 - - Nov 30 2017 0.8 of the promissory note rediscount rate blank promissory note, assignment of claims
BRE Bank S.A. Warsaw 50,000 - 19,077 - - - Overdraft facility - ON WIBOR + bank’s margin blank promissory note
Pekao S.A. Warsaw 100,000 - 728 - - - Overdraft facility - 1M WIBOR + bank’s margin power of attorney over bank account, voluntary submission to enforcement
Bank Ochrony Środowiska S.A. Warsaw 68,000 - - - 22,312 - - Jun 30 2016 1M WIBOR + bank’s margin mortgage, assignment of tangible assets, assignment of rights under insurance policy, blank promissory note, assignment of rights under sale agreements
Bank Ochrony Środowiska S.A. Warsaw 14,688 - - - 9,490 - - Jun 30 2016
Bank Ochrony Środowiska S.A. Warszawa 5,100 - - - 5,100 - - Dec 20 2016
PKO BP S.A. Warsaw - USD 32,500  83,212 USD 24,463 - - Overdraft facility (2) - 1M LIBOR USD + bank’s margin pledge, guarantee
PKO BP S.A. Warsaw - USD 47,500 161,569 USD 47,500 - - Dec 31 2012 - 1M LIBOR USD + bank’s margin pledge, guarantee, blank promissory note
Pekao S.A. Warsaw 160.000  or USD or EUR equivalent 147,920 USD 43,284 - - Dec 31 2012 - 3M LIBOR USD + bank’s margin blank promissory note
23,552 EUR 5,332 - - Dec 31 2012 - 3M EURIBOR + bank’s margin
Bank syndicate (6) - - EUR 43,000 193,104 EUR 43,720 - - Apr 14 2012 (3) - 6M EURIBOR + bank’s margin mortgage, registered pledge, voluntary submission to enforcement, surety
Funds in bank deposits securing payment of interest and principal instalments (177,011) USD (51,797) - - - - - -
  TOTAL 211,217 - 189,187 -  
1,976,983 USD 578,468 4,786,893 USD 1,394,645
219,540 EUR 49,705 7,809 EUR 1,767
2,407,740 - 4,983,889 -

(1) Measured at amortised cost, including arrangement fees.
(2) Not treated as cash equivalents.
(3) The loan was repaid in full on April 16th 2012.

The bank margins on the contracted borrowings and other debt instruments are within the range of 0.26pp. – 4.00pp.

Bank borrowings as at December 31st 2010:
(restated)

Bank name; form of incorporation Registered office Facility amount as per agreement Outstanding amount (current portion)(1) Outstanding amount (non-current portion)(1) Maturity date Financial terms and conditions (interest rate, interest payment schedule, etc.) Type of security
PLN ('000) Currency ('000) PLN ('000) Currency ('000) PLN ('000) Currency ('000) Current portion Non-current portion
Bank Syndicate (1) - - USD 400,000 1,187,413 USD 400,553 - - Dec 20 2011 - based on 3M or 6M LIBOR USD, depending on the interest period selected at a given time + bank's margin registered pledge over inventories, registered pledge over bank accounts, assignment of rights under inventory insurance agreements, assignment of rights under inventory storage agreements, voluntary submission to enforcement
Bank syndicate (2) - - USD 1,125,000 91,439 USD 30,775 3,120,146 USD 1,049,856 Oct 15 2011 Jan 15 2021 based on 1M, 3M or 6M LIBOR USD, depending on the interest period selected at a given time + bank's margin mortgage, registered pledge over existing and future movables, registered pledge over bank accounts, assignment of rights under agreements for the implementation and management of the 10+ Programme, assignment of rights under insurance agreements relating to the Gdańsk refinery, assignment of licence, hedging and sale agreements with a value of over PLN 10,000 thousand per year, submission to enforcement
Bank syndicate (3) - - USD 425,000 37,214 USD 12,550 1,020,870 USD 344,228 Oct 15 2011 Jan 15 2021 fixed interest rate
Bank syndicate (4) - USD 200,000 or equivalent 76.328 - - - Overdraft facility - 3M WIBOR + bank's margin
17.322 EUR 4,374 - - 3M EURIBOR + bank's margin
108.329 USD 36,547 - - 3M LIBOR USD + bank's margin
Pekao S.A. Warsaw 150.000 - 30,165 - - - Overdraft facility(2) - 1M WIBOR + bank's margin power of attorney over bank account, voluntary submission to enforcement
Bank Syndicate (5) Warsaw 340.000 - 43,474 - 130,341 - Dec 31 2011 Dec 31 2014 1M WIBOR + bank's margin mortgage
Kredyt Bank S.A. Warsaw 60.000 - 6,000 - 20,987 - Dec 31 2011 Jun 30 2015 1M WIBOR + bank's margin mortgage
PKO BP S.A. Warsaw 20.000 - 1,500 - 18,125 - Dec 31 2011 Dec 31 2019 1M WIBOR + bank's margin mortgage
Pekao S.A. Warsaw 20.000 - 1,500 - 18,125 - Dec 31 2011 Dec 31 2019 1M WIBOR + bank's margin mortgage
Pekao S.A. Warsaw 14,000 - 9,170 - - - Overdraft facility - 1M WIBOR + bank's margin power of attorney over bank account, representation on voluntary submission to enforcement
Raiffeisen Bank Polska S.A. Rzeszów 10,000 - 1,985 - 2,000 - Dec 31 2011 Dec 28 2012 1M WIBOR + bank's margin power of attorney over bank account, voluntary submission to enforcement, security (deposit) mortgage (hipoteka kaucyjna), assignment of rights under insurance policy, registered pledge over inventories, registered pledge over tangible assets
PKO BP S.A. Warsaw 14,000 - 2,143 - - - Jun 17 2011 - 1M WIBOR + bank's margin assignment of receivables, power of attorney over bank account
Pekao S.A. Kraków 26,837 EUR 7,060 2,334 EUR 589 9,336 EUR 2,357 Oct 31 2011 Oct 31 2015 1M EURIBOR + bank's margin mortgage
Pekao S.A. Kraków 30,000 - 14,186 - - - Overdraft facility - 1M WIBOR + bank's margin assignment of receivables, pledge over inventories
Pekao S.A. Kraków 44,754 - 33 - 129 - Oct 31 2011 Oct 31 2015 1M WIBOR + bank's margin mortgage
National Fund for Environmental Protection and Water Management Warsaw 35,000 - 6,500 - 18,556 - Dec 20 2011 Dec 20 2014 0.8 of the promissory note rediscount rate bank guarantee, blank promissory note
BRE Bank S.A. Warsaw 30,000 - 3,207 - - - Overdraft facility - O/N WIBOR + bank's margin blank promissory note
ING Bank Śląski S.A. Warsaw 35,000 - 32,036 - - - Overdraft facility - 1M WIBOR + bank's margin representation on voluntary submission to enforcement
Pekao S.A. Warsaw 30,000 - 3,790 - - - Overdraft facility - 1M WIBOR + bank's margin power of attorney over bank account
Bank Ochrony Środowiska S.A. Warsaw 68,000 - - - 22,312 - - Jun 30 2016 1M WIBOR + bank's margin mortgage, assignment of tangible assets, assignment of rights under insurance policy, blank promissory note, assignment of rights under sale agreements
Bank Ochrony Środowiska S.A. Warsaw 14,688 - - - 9,490 - - Jun 30 2016
Bank Ochrony Środowiska S.A. Warsaw 5,100 - - - 5,100 - - Dec 20 2016
DnB NOR Bank ASA Stavanger, Norway - NOK 180,000 23,624 NOK 46,586 - - Dec 22 2011 - 9M NIBOR + bank's margin tax receivable - refunded exploration expenses
PKO BP S.A. Warsaw - USD 32,500 96,766 USD 32,500 - - Nov 30 2011 - 1M LIBOR USD + bank's margin pledge, guarantee
PKO BP S.A. Warsaw - USD 32,500 10,463 USD 3,523 - - Overdraft facility(2) - 1M LIBOR USD + bank's margin pledge, guarantee
Pekao S.A. Warsaw 160,000 or USD or EUR equivalent 125.085 USD 42,200 - - Nov 15 2011 - 3M LIBOR USD + bank's margin blank promissory note
AB Geonafta Gargždai,Lithuania - EUR 2,000 - - 7,936 EUR 2,004 - Dec 31 2015 fixed interest rate none
Funds in bank deposits securing payment of interest and principal instalments (8.665) USD (2.923) - -   - - -
  TOTAL 232,017 - 245,165 -  
1,648,044 USD 555,725 4,141,016 USD 1,394,084
19,656 EUR 4,963 17,272 EUR 4,361
23,624 NOK 46,586 - -
1,923,341 - 4,403,453 -

(1) Measured at amortised cost, including arrangement fees.
(2) Not treated as cash equivalents.

The bank margins on the contracted borrowings and other debt instruments are in the range of 0.45pp. – 3.50pp.

This is a translation of a document originally issued in Polish.

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© 2012 GRUPA LOTOS S.A. ul. Elbląska 135, 80-718 Gdańsk, Poland, The joint-stock company entered into the National Court Register,
maintained by the District Court for Gdańsk-Północ, VII Commercial Division, under entry No. KRS 0000106150.
Tax Identification Number (NIP): 583-000-09-60. Industry Identification Number (REGON): 190541636.
Share capital PLN 129 873 362 paid up in full.